Tuesday

20th Nov 2018

EU blacklists 17 tax havens, avoids sanctions

  • Bermuda and seven other entities were given three more months to promise to fight tax evasion and tax avoidance, due to recent hurricanes (Photo: Mike Oropeza)

The EU adopted on Tuesday (5 December) a blacklist of 17 tax havens and a 'grey list' of 44 countries and jurisdictions that will have to take measures against tax evasion and tax avoidance, but it stopped short of planning sanctions.

The blacklist agreed by finance ministers includes American Samoa, Bahrain, Barbados, Grenada, Guam, Korea, Macao the Marshal Islands, Mongolia, Namibia, Palau, Panama, Santa Lucia, Samoa Trinidad and Tobago, Tunisia, and United Arab Emirates.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The second list includes countries like EU candidates Turkey, Serbia and Montenegro, as well as Switzerland, Bosnia and Herzegovina, Macedonia, Morocco, Thailand, Vietnam and Hong Kong.

It also includes entities that are considered as being among the main tax havens but which have promised to change their legislation: Bermuda, the Cayman Islands as well as UK-associated Jersey, Guernsey and the Isle of Man.

Eight countries and territories recently hit by hurricanes - Antigua and Barbuda, Anguilla, Bahamas, British Virgin Islands, Dominica, St Kitts and Nevis, Turks and Caicos, US Virgin Islands - were given a grace period until February to come up with commitments.

The two lists "will help to increase the transparency of the global tax environment," Estonian finance minister Toomas Toniste, who chaired the meeting, told journalists.

Grey list

After months of talks in the secretive code of conduct expert group, the lists were changed until the last minute following agreements with and commitments from screened countries.



EU experts looked at 92 countries, before the list of non-cooperative entities was taken down to about 50.

Work accelerated in recent weeks, after the Paradise Papers revelations increased public pressure to take action.

"We've done in two months what would have been done in eight-nine months otherwise," an diplomat noted ahead of the meeting.

"I'm glad that many jurisdictions have taken this very seriously and are willing to cooperate in order to avoid being listed," Toniste said.

The fact that the blacklist includes only 11 countries and territories can be seen as a "success," an EU source told EUobserver - who admitted however that the real test will be how the grey list countries behave in the future.

"I would have preferred that it is called the 'orange list'," the source said. "It would have made clear that they can get a red light or a green light according to what they do next."

The grey list entities pledged to take measures required by the EU such as more transparency, exchange of information or fairer taxations and have one year - two years for developing countries - to implement them.

Countries that fail to meet their promises could end up on the blacklist, but EU ministers did not discuss whether sanctions could be taken.

New norm

For the EU, publishing the list at Tuesday's meeting, just a month after the publication of the Paradise Papers, was the priority, while some member states like Malta, Luxembourg or the UK did not want to consider sanctions.

"If someone wants additional sanctions, they can talk about it. But one should not underestimate the effect of a black list," said Luxembourg's Pierre Gramegna.

Toniste, speaking as the EU rotating presidency, assured that it would not be "just a one-off process."

"We will regularly review and update the list in the years to come. Our aim is to ensure that good tax governance becomes the new norm," he said in a statement.

"Stronger measures would have been preferable," European Commission vice president Valdis Dombrovskis said after the meeting, as the commission had been insisting that sanctions would make the list "credible".

"We hope this work will continue," he said.

His tax colleague Pierre Moscovici said that the commission will come up "in the coming weeks with a proposal for an EU level approach" and called on member states to "take their responsibilities" and "coordinate sanctions".

French minister Bruno Le Maire noted that designing sanctions would be a "question of credibility" for the EU's anti-tax havens action.

He said however that Tuesday's decision showed "political courage" because the EU did not hesitate to blacklist countries that are "close to the EU".

'No tax haven in the EU'

"It seems the EU's pressure has obliged some of the most notorious tax havens like Switzerland and Bermuda to commit to reforms," said Aurore Chardonnet, from the Oxfam NGO.

"However, placing countries on a 'grey list' shouldn't just be a way of letting them off the hook," she said in a statement, asking the EU "to make sure governments on the grey list follow up on their commitments".

Tove Maria Ryding, from Eurodad, another NGO, said that the list "looks like an attempt to divert attention away from the fact that EU governments have failed to clean up their own house".

"The EU itself is central to the tax haven problem, and many European countries have tax structures that multinationals can use to avoid taxes – that's deeply concerning," she said in a statement.

"There is no tax haven in the EU," Moscovici assured, insisting that EU member states "respect international standards".

He admitted however that some practices should be "prohibited" or "fought" in some member states.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

EU commission wants 'credible' tax haven blacklist

The EU's finance commissioner Pierre Moscovici told reporters that he wants a credible EU blacklist of tax havens following the latest media tax avoidance revelations of the wealthy elite in the Paradise Papers.

EU states loosen grip on tax havens

Finance ministers removed eight entities from the tax havens blacklist, while ruling out more transparency or sanctions - prompting criticism from tax-campaigning NGOs such as Oxfam.

News in Brief

  1. Ireland extradites Polish man despite rule of law concerns
  2. Germany and France agree eurozone budget framework
  3. Austrian foreign minister: EU's Israel policy 'too strict'
  4. Soros and Kurz discuss Central European University move
  5. EU set to tighten rules on foreign strategic investment
  6. Macron repeats call for unified Europe in Bundestag speech
  7. US warns EU banks and firms against trading with Iran
  8. Merkel urged Romania not to move embassy to Jerusalem

Stakeholder

An open China brings opportunities to Europe

Some 60 years ago, the first major World Fair after World War II was held in Brussels. Sixty years on, China International Import Expo (CIIE), the first world expo dedicated to expanding imports, will open in Shanghai, China.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSTheresa May: “We will not be turning our backs on the Nordic region”
  2. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  3. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  4. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  5. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  6. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  7. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  8. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  9. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  10. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  11. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  12. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs

Latest News

  1. Whistleblower: Danske Bank gag stops me telling more
  2. Spain raises Gibraltar, as EU and UK talk post-2020 relationship
  3. Panic is not answer to EU's security challenges
  4. Dutch flesh out proposal for EU human rights sanctions
  5. EU cheerleaders go to Russia-occupied Ukraine
  6. EU must recognise new force for Balkans destabilisation
  7. Brexit dominates EU affairs This WEEK
  8. How the EU commission got tunnel vision on self-driving cars

Stakeholders' Highlights

  1. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  2. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  3. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  4. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  5. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  6. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  7. Mission of China to the EUChina: Work Together for a Better Globalisation
  8. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  9. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  10. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  11. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  12. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future

Join EUobserver

Support quality EU news

Join us