European Union blacklists 17 tax haven countries

The EU has named 17 states in the bloc’s first tax haven blacklist and put another 47 states on notice, including four British overseas territories and crown dependencies, in a move designed to crack down on the estimated €57.4bn lost to avoidance every year.

The blacklisted states included South Korea, Mongolia, Namibia, Panama, Trinidad & Tobago, Tunisia and the United Arab Emirates.

Of the jurisdictions with links to Britain, the states of Bermuda, the Cayman Islands, the Isle of Man and Jersey, have been placed on a list of those who have committed by the end of 2018 to reform their tax structures, to ensure that firms are not simply using the country’s 0% corporate tax rates to shield their profits.

A further eight states affected by recent hurricanes are to be addressed in February.

Sanctions against blacklisted states are yet to be agreed at EU level, and therefore, the European commission is encouraging individual member states to draw up their own plans.

Namibia was the only country on the list, that made no effort to correspond with the EU’s tax experts on the European council’s code of conduct (COC) group, when issues were raised with the country’s government.

The other states on the blacklist are: American Samoa, Bahrain, Barbados, Grenada, Guam, Macau, the Marshall Islands, Palau, St Lucia, and Samoa.

Pierre Moscovici, the European commissioner for economic and financial affairs, described the publication as a vital “first step”.

“This list represents substantial progress. Its very existence is an important step forward. But because it is the first EU list, it remains an insufficient response to the scale of tax evasion worldwide.

“I therefore call on the finance ministers to avoid any naivety on commitments. The countries that have taken commitments must change their tax laws as soon as possible. I also call on ministers to agree quickly on dissuasive national sanctions. We must do everything we can to keep up the pressure on all of these countries. We must not accept unfair tax competition and opacity,” he said.

“Europe has taken a step forward, but the fight against tax havens must continue unabated. In order to do this, I expect the member states to set a precise timetable: in three months’ time, we will have to examine the situation of the countries affected by hurricanes.

“In six months’ time, we will have to review all the commitments made. Tax havens must not slip off Europe’s radar screen. Countries that are not on the blacklist will only be fully off the hook once they have fulfilled their commitments.

“As a European citizen, I share the expectations of those who hoped for more. I say to them, let us take this list for what it is: a first step. And let us keep up the pressure together, on the Member States and on third countries,” Moscovici added.

The announcement comes less than a month after the publication of the Paradise Papers, a global leak containing information about individuals and companies holding offshore finances.