Anguilla, the Bahamas and the Turks and Caicos Islands have been added to the EU list of non-cooperative tax jurisdictions (blacklist). Countries will be added to the list if, according to EU Council, they do not cooperate in the fight against tax evasion. There are currently twelve jurisdictions on the list, many of which levy little or no corporate tax.
Following the Code of Conduct Group meetings on 9, 15 and 20 September 2022 and the High-Level Working Party on Tax Questions meeting of 20 September 2022, the before mentioned jurisdictions have been added to the list based on concerns that “these three jurisdictions, which all have a zero or nominal only rate of corporate income tax, are attracting profits without real economic activity (criterion 2.2 of the EU list). In particular, they failed to adequately address a number of recommendations of the OECD Forum on Harmful Tax Practices (FHTP) in connection to the enforcement of economic substance requirements, something to which they committed earlier this year.”
The state of play in Annex II of the Blacklist also details steps taken by various jurisdictions to undertake reforms in order to comply with tax good governance standards. More detail on this can be found in the Code of Conduct (Business Taxation) report to the Council of the EU.
In addition, the Council recommended that certain states engage with the EU to bring their tax practices in line with EU law and policy, notably:
• In the area of tax transparency: Turkey, Barbados, Botswana, Dominica, Seychelles;
• In the area of fair taxation: Costa Rica, Hong Kong, Malaysia, Qatar, Uruguay;
• On technological – economic zones with preferential taxation: North Macedonia, Jamaica, Jordan, Armenia;
• In the area of preferential tax regimes/ holding companies: Russia.
The Council underlines the importance of promoting and strengthening tax good governance mechanisms, fair taxation, global tax transparency and fight against tax fraud, evasion and avoidance, both at the EU level and globally. The Council regrets that the 12 countries on the list have not adapted their tax regimes to European codes of conduct for tax evasion since 2017. Accordingly, the Council approves the revised EU list of non-cooperative jurisdictions for tax purposes (“EU list”) set out in Annex I https://data.consilium.europa.eu/doc/document/ST-13092-2022-INIT/en/pdf
Not everyone is satisfied with the Blacklist as it is now. Various MEPs and organizations such as Oxfam find it hypocritical that EU Member States themselves cannot be included on the list. The Bahamas was previously added to the list in March 2018, but was removed two months later. For this reason, the European Parliament believes that there is an erratic policy without consistency that needs to change.
The following jurisdictions are currently on the Blacklist:
• American Samoa
• The Bahamas
• Trinidad and Tobago
• Turks and Caicos Islands
• US Virgin Islands
The relevance of the above for the Netherlands is that the EU Blacklist will be included in the national Blacklist once updated. In addition to the non-cooperative jurisdictions, this national list also includes low-tax jurisdictions. The limit for ‘low tax’ is 9%. The Dutch Blacklist is important for the withholding tax on interest and royalties, for the controlled-foreign-company (CFC) rules and for advance tax rulings. In addition, the EU blacklist is also important for the notification obligation under DAC6 (essential hallmark C.1.b.ii).
The EU Blacklist is reviewed twice per year, and will next be reviewed in February 2023.