The EU moved Anguilla, Dominica, and Seychelles from its blacklist of non-cooperative tax jurisdictions onto its "grey list" following a recent update on October 5, 2021. The EU also removed Australia, Eswatini, and Maldives from the grey list (and the document entirely) having fulfilled all their commitments. In addition, Costa Rica, Hong Kong (SAR), Malaysia, North Macedonia, Qatar, and Uruguay were added to the grey list. No new countries were added to the EU blacklist.
Jurisdictions on the EU blacklist may face certain defensive tax measures, including more stringent reporting rules and ineligibility for certain EU funding.
Background
The EU blacklist is part of the EU's effort to clamp down on tax avoidance and harmful tax practices. The EU assesses jurisdictions against three main criteria when determining whether a particular jurisdiction is listed — tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting. The EU has revised its list several times since it was first published in 2017.
Several EU countries have introduced or proposed defensive measures targeted at non-cooperative jurisdictions on the EU list, such as:
- Non-deductibility of costs
- Withholding tax measures
- Controlled foreign company rules
- Limitation of participation exemption on profit distribution, or
- Administrative measures.
The EU Mandatory Disclosure requirements also include a specific reporting rule for cross-border payments between associated enterprises where the recipient is resident in an EU-blacklisted jurisdiction.
Updated blacklist
Following the latest update, nine jurisdictions are on the EU blacklist:
- American Samoa
- Fiji
- Guam
- Palau
- Panama
- Samoa
- Trinidad and Tobago
- U.S. Virgin Islands
- Vanuatu.
Updated grey list
The EU also identifies "grey list" jurisdictions that do not yet comply with all international tax standards but which have made sufficient commitments to implement tax good governance principles. These jurisdictions are required to follow-through on these commitments to avoid being moved to the blacklist.
Following the latest update, the grey list now includes 15 jurisdictions:
- Anguilla
- Barbados
- Botswana
- Costa Rica
- Dominica
- Hong Kong (SAR)
- Jamaica
- Jordan
- Malaysia
- North Macedonia
- Qatar
- Seychelles
- Thailand
- Turkey
- Uruguay.
For more information, contact your KPMG adviser.
Information is current to October 11, 2021. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
