Eight countries have been removed from the EU blacklist of non-cooperative jurisdictions.
As a result, the following countries will not face EU defensive measures such as sanctions and limited access to EU funding: Barbados, Grenada, South-Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates. These countries have pledged to reform their tax systems in order to align them with conditions stipulated by the EU. However, they will now be on a so-called "grey list" and be subject to close monitoring.
Nine countries now remain on the blacklist: American Samoa, Bahrain, Guam, Marshall Islands, Namibia, Palau, Saint Lucia, Samoa and Trinidad and Tobago.
The EU's 2017 list of non-cooperative tax jurisdictions was originally released in early December. Before this latest announcement, seventeen countries were placed on an EU 'blacklist' for failing to meet agreed good tax-governance standards. The list looks at non-EU countries who trade economically with the EU; it is a new tool for dealing with tax governance and replaces the former patchwork of national lists so that these jurisdictions can be dealt with more effectively. The list may be revised at least once a year and is the result of a thorough screening process.
EU taxpayers dealing with entities from countries on the blacklist may experience a greater likelihood of being audited and monitored by their local EU tax jurisdiction-including taxpayers who use structures or arrangements involving blacklisted jurisdictions. According to the European Commission, multinationals that have a presence in blacklisted jurisdictions may also face stricter reporting requirements or face limitations in their access to EU funding, among other potential measures that specific EU Member States may take.
The Grey list
Fifty-five jurisdictions have now been identified as cooperative, subject to successful delivery on their commitments to comply with the EU screening criteria (EU grey list). These commitments will be monitored and should generally be implemented by the end of 2018, with a possible extension to 2019 for developing countries. Some countries were also granted, under certain conditions, an extension of the deadline to respond to EU investigations.
For more information, contact your KPMG adviser.