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Cayman Islands added to EU tax haven list

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Cayman Islands added to EU tax haven list

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(BRUSSELS) - EU finance ministers at their meeting on Tuesday added the Cayman Islands and Panama to the EU list of 'non-cooperative jurisdictions for tax purposes', in addition to the 8 jurisdictions that are already listed.

The Council's revised conclusions added four countries in all, including also Palau and the Seychelles, saying these jurisdictions did not implement the tax reforms to which they had committed by an agreed deadline.

Annex II of the conclusions, which covers jurisdictions with pending commitments, reflects the deadline extensions granted to 12 jurisdictions to enable them to pass the necessary reforms to deliver on their commitments. Most of the deadline extensions concern developing countries without a financial centre who have already made meaningful progress in the delivery of their commitments.

16 jurisdictions (Antigua and Barbuda, Armenia, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cabo Verde, Cook Islands, Curaçao, Marshall Islands, Montenegro, Nauru, Niue, Saint Kitts and Nevis, Vietnam) managed to implement all the necessary reforms to comply with EU tax good governance principles ahead of the agreed deadline and are therefore removed from Annex II.

"The work on the list of non-cooperative tax jurisdictions is based on a thorough process of assessment, monitoring and dialogue with about 70 third country jurisdictions," said Croatia's finance minister Zdravko Maric, for the EU presidency: "Since we started this exercise, 49 countries have implemented the necessary tax reforms to comply with the EU's criteria."

This was an undeniable success, he said, but it was work in progress, and criteria are "constantly reviewed".

The list of non-cooperative tax jurisdictions, which is part of the EU's external strategy for taxation as defined by the Council, is intended to contribute to ongoing efforts to promote tax good governance worldwide.

It was first established in December 2017 and is based on a continuous and dynamic process of:

  • establishing criteria in line with international tax standards;
  • screening countries against these criteria;
  • engaging with countries which do not comply;
  • listing and de-listing countries as they commit or take action to comply;
  • monitoring developments to ensure jurisdictions do not backtrack on previous reforms.

The list includes jurisdictions that have either not engaged in a constructive dialogue with the EU on tax governance or failed to deliver on their commitments to implement reforms to comply with the EU's criteria on time.

Jurisdictions that do not yet comply with all international tax standards but committed to reform are considered cooperative and included in a state of play document (Annex II). The Council's code of conduct group on business taxation monitors that jurisdictions enact the necessary reforms by the agreed deadlines. Once a jurisdiction meets all its commitments, it is removed from Annex II.

Most commitments taken by third country jurisdictions were with a deadline of end 2019, whilst their enactment in national law was carefully monitored at technical level by the Code of Conduct Group on business taxation until the beginning of this year. The Council adopted the revised EU list of non-cooperative jurisdictions resulting from this exercise and endorsed a revised state of play with respect to pending commitments.

The Council will continue to regularly review and update the list in the coming years, taking into consideration the evolving deadlines for jurisdictions to deliver on their commitments and the evolution of the listing criteria that the EU uses to establish the list.

In parallel, as regards 'defensive' measures with regard to the listed jurisdictions, the Council produced a guidance on further coordination of national defensive measures in the tax area towards non-cooperative jurisdictions in December 2019. It invited all member states to apply legislative defensive measure in taxation vis-à-vis the listed jurisdictions as of 1 January 2021, with the aim of encouraging those jurisdictions' compliance with the Code of Conduct screening criteria on fair taxation and transparency.

Council conclusions on EU list of non-cooperative jurisdictions for tax purposes, 18 February 2020

Council's page on the EU list of non-cooperative jurisdictions

Economic and Financial Affairs Council, 18 February 2020, main results

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