In a press release on its website today (February 20, 2024), the European Union (EU) reported that Member States “decided to remove four jurisdictions – the Bahamas, Belize, Seychelles, and Turks and Caicos Islands – from the EU list of non-cooperative jurisdictions for tax purposes (Annex I).”
“The Bahamas and Turks and Caicos Islands were fully delisted because they successfully addressed deficiencies in their enforcement of economic substance requirements,” the release stated.
It added: “Belize and Seychelles were moved to Annex II pending the results of a supplementary review by the Global Forum on Tax Transparency and Exchange of Information. Today’s update is another step ahead in the EU’s continuous effort to promote tax transparency and fair taxation globally. It confirms a general positive trend for the majority of the jurisdictions concerned, whose engagement in the process continues to produce positive results.
Based on this update, Annex I of the EU list is now made up of 12 jurisdictions that have not improved their tax good governance standards or made insufficient progress in delivering on their previous commitments. Those countries are: American Samoa, Anguilla, Antigua and Barbuda, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad and Tobago, US Virgin Islands, and Vanuatu.
Additionally, 10 jurisdictions now feature in Annex II based on commitments they have taken to improve their tax good governance. The EU will closely monitor these commitments to make sure they are followed up on. Thanks to the EU listing process, many countries have already taken concrete steps and measures to comply with tax good governance standards.
As part of the EU listing process, the Commission provides considerable support to third countries in strengthening their tools against tax abuse, as well as technical assistance to those that need it. The Commission is also working with Member States to further strengthen the EU listing criteria to ensure more tax transparency, while promoting the global implementation of minimum effective taxation rules. Work on common or more coordinated tax defensive measures against listed jurisdictions also continues.
The EU list of non-cooperative jurisdictions for tax purposes is part of the EU’s external strategy on taxation and aims to contribute to ongoing efforts to promote tax good governance worldwide. The EU listing exercise is based on a thorough process of screening, assessment, monitoring, and as an international cooperation exercise, dialogue and outreach. It has prompted unprecedented engagement between the EU and its international partners on important tax issues.”
The Nassau Guardian reported that responding to the news, Attorney General Ryan Pinder said: “We have worked extremely hard over the last 18 months, to ensure that we’re positioned to be removed by the European Union as a non-cooperative jurisdiction.”
MORE ON THE EU LIST AND THE PROCESS
First proposed by the Commission in January 2016, the EU list of non-cooperative third countries has proven a true success in promoting fair taxation worldwide. Since the first list was adopted by Member States in the Council in December 2017, many countries have taken concrete measures to comply with tax good governance standards. With each update of the list, we see that this clear, transparent and fair process is delivering real change. This list is part of the EU’s work to fight tax evasion and avoidance and aims to create a stronger deterrent for countries that consistently refuse to play fair on tax matters.
REASSONS FOR REMOVING JURISDICTIONS FROM THE LIST
This EU list of non-cooperative tax jurisdictions (Annex I) includes countries that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms. Those reforms should aim to comply with a set of objective tax good governance criteria, which include tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting. The list is updated twice a year to keep track of developments, usually in February and October, under the auspices of the EU finance ministers.
Concerning Bahamas and Turks and Caicos Islands, ever since October 2022, deficiencies in the enforcement of economic substance requirements had been identified in both of these jurisdictions by the OECD Forum of Harmful Tax Practices (FHTP). In the FHTP’s most recent assessment, the recommendations to both jurisdictions to remedy these deficiencies were converted from “hard” to “soft” recommendations, which allowed the Code of Conduct Group to consider these jurisdictions compliant with the standard for jurisdictions with no or only a nominal corporate income tax.
In October 2023, Belize and Seychelles were included in the EU list of non-cooperative jurisdictions for tax purposes after a negative assessment from the OECD Global Forum with regard to exchange of information on request. Following changes to the applicable rules in these jurisdictions, the Global Forum has granted them both a supplementary review, which will be undertaken in the near future. Pending the outcome of this review, Belize and Seychelles have been included in the relevant section of Annex II.
