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EU updates non-cooperative tax jurisdiction blacklist

EU updates non-cooperative tax jurisdiction blacklist

EU adds Barbados and Anguilla to the blacklist, and removes the Cayman Islands and Oman

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Barbados and Anguilla have been added to the EU's blacklist of non-cooperative tax jurisdictions, following a recent update on October 6, 2020. The EU has also removed the Cayman Islands and Oman from the blacklist, and outlined progress made by certain "grey list" jurisdictions. Jurisdictions on the EU blacklist may face sanctions, including ineligibility for certain EU funding and more stringent reporting rules.

Background

The EU blacklist is part of the EU's effort to clamp down on tax avoidance and harmful tax practices. The EU assesses jurisdictions against three main criteria when determining whether a particular jurisdiction is listed – tax transparency, fair taxation and real economic activity. The EU has revised its list several times since it was first published in 2017 and intends to update its blacklist a maximum of twice per year.

The EU Mandatory Disclosure requirements also include a specific reporting rule for cross-border payments between associated enterprises where the recipient is resident in an EU blacklisted jurisdiction.

The EU Council has asked member states to implement at least one of the following defensive measures against non-cooperative jurisdictions: non-deductibility of costs, withholding tax measures, controlled foreign company rules, limitation of participation exemption on profit distribution or administrative measures.

Blacklist changes

According to the EU, Anguilla was added to the blacklist because it received a "Non-Compliant" rating from the Global Forum for Exchange of Information on Request. Similarly, Barbados was downgraded to a "Partially-Compliant" rating by the Global Forum and was therefore added to the blacklist. The Global Forum noted that Barbados' legal and regulatory framework is overall in line with the OECD's international standard of exchange of information on request, including concerning the availability of beneficial ownership information. However, the Global Forum also noted that ensuring practical implementation of the relevant rules remains a challenge.

The Cayman Islands was removed from the blacklist after it was determined that it enhanced its framework on Collective Investment Funds, while Oman fulfilled certain commitments to the OECD Multilateral Convention on Mutual Administrative Assistance and the OECD Automatic Exchange of Information.

As a result, the following 12 jurisdictions now appear on the EU blacklist:

  • American Samoa
  • Anguilla
  • Barbados
  • Fiji
  • Guam
  • Palau
  • Panama
  • Samoa
  • Seychelles
  • Trinidad and Tobago
  • US Virgin Islands
  • Vanuatu

Grey list changes

The EU also tracks "grey list" jurisdictions which are required to follow-through on certain commitments to avoid being moved to the blacklist.

As part of this update, the EU removed the following jurisdictions from the grey list after they deposited the instruments of ratification of the OECD Convention on Mutual Administrative Assistance in Tax Matters:

  • Mongolia
  • Bosnia and Herzegovina

The EU also extended commitment deadlines for certain other countries and noted progress made by grey list jurisdictions. The grey list now contains 10 jurisdictions:

  • Australia
  • Botswana
  • Eswatini
  • Jordan
  • Maldives
  • Morocco
  • Namibia
  • Saint Lucia
  • Thailand
  • Turkey

For more information, contact your KPMG advisor.

Information is current to October 13, 2020. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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