18 February 2020 the European Commission has published an information about the regular update of the “blacklist” of non-cooperative jurisdictions for tax purposes. This time it was decided to list 4 new jurisdictions.

In February 2020 Cayman Islands, Palau, Panama and Seychelles have been added to the “blacklist”. As a result, the current version of EU “blacklist” includes 12 jurisdictions:

  • American Samoa
  • Cayman Islands
  • Fiji
  • Guam
  • Oman
  • Palau
  • Panama
  • Samoa
  • Seychelles
  • Trinidad and Tobago
  • US Virgin Islands
  • Vanuatu

The “blacklist” has been initially formed in December 2017 and included states and territories which do not comply with tax transparency, fair taxation (i.e. jurisdictions which do not apply corporate taxation or apply lower corporate tax rates) and real economic activity standards. It was also mentioned that the “blacklist” may be revised and amended if necessary.

In addition to this, there is a “grey list” which is comprised of jurisdictions that have made commitments to eliminate the non-compliance with common standards of tax administration and exchange of information and are in the active stage of said elimination. Based on the results of monitoring of such actions the EU may decide to include particular jurisdictions to the “blacklist”, or to de-list them at all. The Council of the EU does not specify any measures to be taken to jurisdictions from the “grey list”.

As of February 2020, the following jurisdictions still remain in the “grey list”: Australia, Anguilla, Barbados, Bosnia and Herzegovina, Botswana, Jordan, Curacao, Maldives, Morocco, Mongolia, Nauru, Namibia, Saint Lucia, Thailand, Turkey, Esvatini.

Antigua and Barbuda, Armenia, Bahamas, Belize, Bermuda, British Virgin Islands, Cape Verde, Cayman Islands, Marshall Islands, Saint Kitts and Nevis, Montenegro, Vietnam have been de-listed completely due to compliance with all standards of tax transparency.

It is necessary to mention that the following measures may be applicable (by the EU itself or by Member States) to residents from blacklisted jurisdictions as recommended by the EU:

  1. Non-deductibility of costs;
  2. Controlled Foreign Company rules;
  3. Withholding tax measures;
  4. Limitation of participation exemption;
  5. Switch-over rule;
  6. Reversal of the burden of proof;
  7. Special documentation requirements;
  8. Mandatory disclosure by tax intermediaries of specific tax schemes with respect to cross-border arrangements.

Starting from 2020 the “blacklist” will be revised and updated twice a year.

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