The EU recently added 10 new jurisdictions to its "grey list" of non-cooperative tax jurisdictions. Jurisdictions on the EU grey list do not yet comply with all international tax standards but have made sufficient commitments to implement tax good governance principles, and continue to be monitored by the EU. The following jurisdictions have been added to the grey list:
- The Bahamas
- Belize
- Bermuda
- The British Virgin Islands
- Israel
- Monserrat
- Russian Federation
- Tunisia
- Turks and Caicos Islands
- Vietnam
The EU requires these jurisdictions to follow-through on these commitments to avoid being moved to the blacklist, where they may face certain defensive tax measures, including more stringent reporting rules and ineligibility for certain EU funding, among other measures. The EU's latest update does not amend the blacklist, which currently includes nine jurisdictions.
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 recently noted that it will also start discussing possible impacts of the OECD's Pillar Two solution for a global minimum tax on its listing criteria. 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 blacklist, 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.
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.
Additional disclosures will also be required for countries on the EU blacklist, or on the EU grey list for two consecutive years, under the EU public country-by-country reporting rules.
Grey list
Following the latest update, the EU's grey list now includes the following 25 jurisdictions:
- Anguilla
- The Bahamas
- Barbados
- Belize
- Bermuda
- Botswana
- The British Virgin Islands
- Costa Rica
- Dominica
- Hong Kong (SAR)
- Israel
- Jamaica
- Jordan
- Malaysia
- Monserrat
- North Macedonia
- Qatar
- Russian Federation
- Seychelles
- Thailand
- Tunisia
- Turkey
- Turks and Caicos Islands
- Uruguay
- Vietnam
Blacklist
The following nine jurisdictions remain on the EU blacklist:
- American Samoa
- Fiji
- Guam
- Palau
- Panama
- Samoa
- Trinidad and Tobago
- U.S. Virgin Islands
- Vanuatu
For more information, contact your KPMG adviser.
Information is current to February 28, 2022. 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
