The European Union (EU) has published a blacklist of some 17 countries, mostly small island states, that they labelled tax havens and ‘non-cooperative jurisdictions’. Photo: Internet Source

Trinidad and Tobago (left) and St Lucia (right) are two of the Caribbean countries blacklisted by the European Union (EU). Photo: VINO

Barbados (above) and Panama (below) have also found themselves being labelled by the European Union as uncooperative jurisdictions and tax havens. Photo: Internet Source

Former Permanent Secretary and Businessman Mr Julian Willock, who often speaks to the local, regional and international media on financial services, said the [British] Virgin Islands must keep fighting to preserve its offshore sector as the objectives have not changed by those who are determined to undermine what we do, to simply facilitate global trade around the word. Photo: VINO/File

It was around December 5, 2017 that the European Union (EU) published a blacklist of some 17 countries, mostly small island states, that they labelled tax havens and "non-cooperative jurisdictions."

The EU claimed that the 17 countries are not meeting their standards, helping to evade taxes and not doing enough to avoid tax schemes and came after some 10 months of investigations and 2 years of struggling for national backing of the list, according to EU Finance Ministers.

However, tax watchdog groups went further, claiming that the EU blacklist has been weak for omitting the most notorious tax havens, but never named the so called ‘notorious countries.’

The list follows the leaking of the Panama Papers and the Paradise Papers (both reported on this news site), revealing how companies and individuals hid their wealth from tax authorities around the world in offshore accounts, according to the BBC.

What next for blacklisted countries?

EU tax commissioner Pierre Moscovici said the blacklist represented "substantial progress", adding: "Its very existence is an important step forward. But because it is the first EU list, it remains an insufficient response to the scale of tax evasion worldwide," according to BBC reporter Jamie Robertson in a December 5, 2017 article.

According to the EU blacklist report, to determine whether a country is a "non-cooperative jurisdiction", the EU index measures the transparency of its tax regime, tax rates and whether the tax system encourages multinationals to unfairly shift profits to low tax regimes to avoid higher duties in other states. In particular, these include tax systems that offer incentives such as 0% corporate tax to foreign companies.

EU members have been left to decide what action to take against the offenders. EU Ministers ruled out imposing a withholding tax on transactions to tax havens as well as other financial sanctions.

Some states, such as Luxembourg and Malta, opposed stricter sanctions, according to officials. EU Commission Vice-President Valdis Dombrovskis said "stronger countermeasures would have been preferable." 

Some listed rebelled, including Panama; Pressure on UK

Panama is one of the 17 countries listed by the EU but its president, Juan C. Varela, said the country was "not in any way a tax haven", according to both the BBC and the UK Telegraph.

The UK-based charity Oxfam last week published its own list of 35 countries that it said should be blacklisted.

Oli Pearce, Oxfam's inequality and tax policy advisor, said: "It is disturbing to see mostly small countries on the EU blacklist, while the most notorious tax havens - UK-linked places like Bermuda, the Cayman Islands, Jersey and the Virgin Islands - escape with a place on the 'grey list', according to their webpage.

The EU is also saying to the UK that it is taking real measures against British Overseas Territories and Crown Dependencies, and the message is "if you go the same way as them with a similar low-tax regime after Brexit, you'll be sanctioned too," the BBC reported.

The 17 blacklisted territories are:

American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, The Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia, and the United Arab Emirates

Hurricane islands escape list; Julian Willock speaks 

The EU made exceptions for countries faced with natural disasters such as hurricanes, and put the process temporarily on hold. However, it remains unclear if the Virgin Islands (VI) escaped this list because of this exception.

Former Permanent Secretary in the Virgin Islands Government and Businessman Julian Willock, who often speaks to the local, regional and international media on financial services, said “this is much of the same, the big powers flexing their powers against small island states.”

Mr Willock, who was at the forefront doing interviews with BBC after the Panama Papers and National Public Radio after the Paradise Papers, told Virgin Islands News Online, “it seems like even when you comply with all the international rules agreed by the EU, they still place you on the list….there is more than meets the eye.”

Willock said the BVI must keep fighting to preserve its offshore sector as the objectives have not changed by those who are determined to undermine what we do, to simply facilitate global trade around the word.”