EU Council revises its tax blacklist, addresses “two out of three” exception and foreign source income exemption regimes–MNE Tax

By Davide Anghileri, University of Lausanne, Switzerland 

As suggested by the EU Code of Conduct Group (Business Taxation), on 4 October, the EU Council today adopted a revised EU list of non-cooperative tax jurisdictions (annex I – blacklist) removing the United Arab Emirates (UAE) and the Marshall Islands.

As a result, nine jurisdictions remain on the list of non-cooperative jurisdictions: American Samoa, Belize, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, US Virgin Islands, and Vanuatu.

The Council also agreed to remove from annex II (grey list) Albania, Costa Rica, Mauritius, Serbia, and Switzerland, as they have implemented all necessary reforms to comply with EU tax good governance principles.

Therefore, 33 jurisdictions remain on the grey list: Albania, Costa Rica, Mauritius, Serbia, and Switzerland have implemented ahead of their deadline all necessary reforms to comply with EU tax good governance principles. These countries will be removed from annex II of the conclusions.

The Council also analysed the situation of the countries which were concerned by the “two out of three” exception for tax transparency that expired on 30 June. The exception provides that countries failing to comply with only one of the three tax transparency sub-criteria would not be listed in annex I.

The Council stated that all jurisdictions concerned met the EU’s three tax transparency criteria. With specific regard to the United States situation, the Council pointed out that the US has a network of exchange of information arrangements sufficiently broad to cover all EU Member States and to allow both exchange of information on request and automatic exchange of information in line with international standards and the respective needs of both sides.

Moreover, the Council endorsed further updates of annex II and guidance on foreign source income exemption regimes.

The ECOFIN Council of 12 March had noted with concern the replacement of harmful preferential tax regimes by such regimes of similar effect in certain jurisdictions.

Finally, the Council will continue to regularly review and update the list in 2019, whilst it has requested a more stable process from 2020 (two updates per year).

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