EU ‘Black-List’ of non-cooperative jurisdictions for tax purposes

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On 05 Dec 2017, the EU Council has issued a ‘black-list’ of non-cooperative jurisdictions for tax purposes. In particular, the list highlights jurisdictions that have not yet shown an initiative to implement the Base Erosion and Profit Shifting (BEPS) Action Plan, the Multilateral Convention on Mutual Administrative Assistance and automatic exchange of information issued by the OECD.

The Council recommends that EU member states apply defensive measures against the black-listed jurisdictions to persuade the jurisdiction to implement the standards for greater tax transparency. Such defensive measures could be the reinforcement of monitoring of certain transactions and increased audit risk for national taxpayers using or benefiting from structures or arrangements in the black-listed jurisdictions. The Council further lists out measures that member states may consider to apply in line with their national tax laws: a) Non-deductibility of costs; b) Controlled Foreign Company (CFC) Rules; c) Withholding tax measures; d) Limitation of participation exemption; e)Switch-over rule; f) Reversal of burden of proof; g) Special documentation requirements; h) Mandatory disclosure by tax intermediaries of specific tax schemes with respect to cross-border arrangements.

The EU list of non-cooperative jurisdictions for tax purposes include:

1.      American Samoa

2.      Bahrain

3.      Barbados

4.      Grenada

5.      Guam

6.      South Korea

7.      Macao

8.      Marshall Islands

9.      Mongolia

10.   Namibia

11.   Palau

12.   Panama

13.   Saint Lucia

14.   Samoa

15.   Trinidad and Tobago

16.   Tunisia

17.   United Arab Emirates