European Council Reviews List of Non-cooperative Countries for Tax Purposes

The updated list of non-cooperative jurisdictions

On 24th Feb 2022, the EU Council published the revised list of non-cooperative jurisdictions for tax purposes.

According to Annex I, the so-called ‘blacklist’ remained unchanged, which include 9 jurisdictions:

• American Samoa
• Fiji
• Guam
• Palau
• Panama
• Samoa
• Trinidad and Tobago
• US Virgin Islands
• Vanuatu

Further commitments by cooperative jurisdictions

Annex II (the so-called “graylist”) covers jurisdictions that have made sufficient commitments to reform tax policies but are still under close monitoring. Accordingly, 10 jurisdictions were added, which are Bahamas, Belize, Bermuda, British Virgin Islands (BVI), Israel, Montserrat, Russia, Tunisia, Turks and Caicos, and Vietnam.

The EU Council will continue to review the list, with the next revision scheduled in October 2022.

Background

The EU list of non-cooperative jurisdictions for tax purposes aims to contribute to ongoing efforts to promote fair tax competition and address harmful tax practices worldwide.

Jurisdictions are assessed on a set of objectives that cover tax transparency, fair taxation, and implementation of international standards designed to prevent tax base erosion and profit shifting.

In 2019, the Council released additional guidance on defensive measures towards non-cooperative jurisdictions. In accordance with such guidance, as of 1 January 2021, the EU member states also committed to using the EU list in the application of at least one of four specific legislative measures:

• non-deductibility of costs
• controlled foreign company (CFC) rules
• withholding tax measures (WHT)
• limitation of the participation exemption on profit distribution