Taxation: European Council adds Dominica to the EU list of non-cooperative jurisdictions and removes Barbados

The Council today (22 February 2021) adopted conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes, deciding to add Dominica to the EU list of non-cooperative jurisdictions and to remove Barbados from that list.

Tax good governance

The list includes jurisdictions worldwide 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 reforms necessary to comply with a set of objective tax good governance criteria.

These criteria relate to tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting.

The changes to the list take into consideration the ratings recently released by OECD Global Forum for Transparency and Exchange of Information (Global Forum) as regards exchange of information on request.

For the purposes of the list, the EU requires jurisdictions to be at least ‘largely compliant’ with the international standard on transparency and exchange of information on request (EOIR).

Dominica has been included in the EU list as it received a ‘partially compliant’ rating from the Global Forum and has not yet resolved this issue.

Barbados was added to the EU list in October 2020 after it received a ‘partially compliant’ rating from the Global Forum.

It has now been granted a supplementary review by the Global Forum and has therefore been moved to a state-of-play document (Annex II of the Council conclusions) pending the outcome of this review.

International tax standards

The state-of-play document included in Annex II of the conclusions identifies jurisdictions which do not yet comply with all international tax standards but which have made sufficient commitments to implement tax good governance principles.

This document has also been updated today (22 February 20219 to reflect various other changes endorsed by the Council.

Morocco, Namibia and Saint Lucia have been removed from the document as they have fulfilled all their commitments. Jamaica has been added as it has committed to amend or abolish its harmful tax regime (special economic zone regime) by the end of 2022.

Australia and Jordan have been granted an extension to the deadline for fulfilling their commitments until the assessment of their reforms by the OECD Forum on Harmful Tax Practices is pending.

Maldives has been given four additional months to ratify the OECD Multilateral Convention on Mutual Administrative Assistance.

Turkey was requested to solve all open issues as regards effective exchange of information with all member states, as specified in the Council conclusions.

In this context Turkey is expected to commit at a high political level by 31 May 2021 to effectively activate its automatic information exchange relationship with all 27 member states by 30 June 2021.

Background

The EU list of non-cooperative jurisdictions for tax purposes was established in December 2017.

This list it is part of the EU’s external strategy on taxation and aims to contribute to ongoing efforts to promote tax good governance worldwide.

Jurisdictions are assessed on the basis of a set of criteria laid down by the Council in 2016. These criteria cover tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting. Work on the list is a dynamic process and it has been revised several times. As of 2020, it is being updated twice a year.

The list is set out in Annex I of the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes.

The conclusions also include a state-of-play document (Annex II) identifying jurisdictions which do not yet comply with all international tax standards but which have made sufficient commitments to reform their tax policies.

Following the February 2021 update, there are 12 jurisdictions on the list of non-cooperative jurisdictions (Annex I): American Samoa, Anguilla, Dominica, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

In addition, nine jurisdictions have made commitments to reform their tax policies and currently appear in the EU’s state-of-play document (Annex II): Australia, Barbados, Botswana, Eswatini, Jamaica, Jordan, Maldives, Thailand and Turkey.

The Council’s decisions are prepared by the Council’s Code of Conduct Group which is also responsible for monitoring tax measures in the EU member states.