The Virgin Islands is listed among eight British overseas territories and crown dependencies that could face EU economic sanctions for having low or no corporation tax. Photo: VINO/File

The Cayman Islands could also face sanctions by the EU. Photo: The Guardian

According to an article published in The Guardian on September 16, 2016, experts have published a scorecard showing red flag warnings set against a list of the 81 countries that may attract companies or individuals seeking to avoid or evade European taxes.

Others include Jersey and the Cayman Islands.

The scorecard will be discussed among member states before a shortlist of countries is selected for further screening and whittled down to a definitive EU list of tax and secrecy havens, to be published at the end of next year.

In the meantime, according to the article, discussions are under way as to sanctions that the EU could impose on countries included in the final list. Options being discussed include the introduction of additional taxes, known as “withholding taxes”, or the removal of tax deductions.

In a paper published in January, the commission said: “This would make it much less attractive for companies to invest or do business in these jurisdictions.”

Several countries apply such defensive measures to protect their tax base from tax havens. But Brussels hopes that the prospect of a coordinated move by EU member states would send a strong signal of Europe’s determination to address tax avoidance and evasion.

Tax jurisdictions flagged

Of the 10 jurisdictions flagged on the scorecard for their low tax rate, eight are British overseas territories or crown dependencies: Anguilla, Bermuda, the [British] Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey and the Turks and Caicos Islands.

The UK’s ability to influence discussions about which jurisdictions make it on to the final tax haven list will be limited following the Brexit vote. Britain has previously fought hard to protect the interests of crown dependencies and overseas territories in Brussels.

As well as red flagging countries with low tax rates, the European commission scorecard highlights 57 jurisdictions, including Hong Kong, Panama and Qatar, over concerns about low levels of financial transparency. There are 51 countries, including Barbados, Mauritius and Curacao, flagged for using “preferential” tax regimes to attract investment.

Pierre Moscovici, the European commissioner for economic and financial affairs, said: “The EU takes its international tax good governance commitments seriously. It is reasonable for us to expect the same from our international partners. We want to have fair and open discussions with our partners on tax issues that concern us all in the global community. The EU list will be our tool to deal with third countries that refuse to play fair.”

Gibraltar, Niue and Vanuatu are among several jurisdictions that do not appear on the EU scorecard, but they are nevertheless thought likely to feature in discussions among member states and may appear on the final list of tax havens.

Meanwhile, Premier and Minister of Finance Dr The Hon D. Orlando Smith could not be reached for comments up to time of publication.