Brussels, 4 October 2022
The EU continues to promote fair tax competition and address harmful tax practices. The Council today decided to add Anguilla, The Bahamas and Turks and Caicos Islands to the EU list of non-cooperative jurisdictions for tax purposes. With these additions, the EU list now consists of 12 jurisdictions:
- American Samoa
- The Bahamas
- Trinidad and Tobago
- Turks and Caicos Islands
- US Virgin Islands
The Council regrets that these jurisdictions are non-cooperative on tax matters and invites them to engage with the EU’s Code of Conduct Group in order to resolve the identified issues.
Turks and Caicos Islands are listed for the first time. The Bahamas were already once listed in 2018, and Anguilla once in 2020.
Fair taxation of businesses benefits all of us. This is why the EU and international partners share a common interest in fighting tax base erosion and profit shifting. I believe all 12 countries on the list will deliver on their commitments and carry out the necessary reforms in the field of taxation as soon as possible, so that they can be deleted from this list when we will next revise it in 6 months time.
Zbyněk Stanjura, Minister of Finance of Czechia
Reasons for adding Anguilla, The Bahamas and Turks and Caicos Islands
This revised EU list of non-cooperative tax jurisdictions (Annex I) includes countries that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms. Those reforms should aim to comply with a set of objective tax good governance criteria, which include tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting.
The reason for the inclusion of Anguilla, The Bahamas and Turks and Caicos Islands in the list is that there are 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 Code of Conduct Group, which prepares the updates of the list, is cooperating closely with international bodies such as the FHTP to promote tax good governance worldwide.
State of play document (Annex II)
In addition to the list of non-cooperative tax jurisdictions, the Council approved the usual state of play document (Annex II) which reflects the ongoing EU cooperation with its international partners and the commitments of these countries to reform their legislation to adhere to agreed tax good governance standards. Its purpose is to recognise ongoing constructive work in the field of taxation, and to encourage the positive approach taken by cooperative jurisdictions to implement tax good governance principles.
The commitment of Bermuda with regard to the OECD FHTP recommendations on the effective implementation of substance requirements was deemed fulfilled, resulting in the deletion of the reference to this jurisdiction in the state of play document.
Furthermore, Tunisia completed its commitment relating to the country-by-country reporting minimum standard (BEPS action 13) and has consequently been deleted from the relevant section in Annex II.
Costa Rica fulfilled its commitment to amend its Special Economic Zones regime, which was considered harmful by the FHTP, and ceases to appear in this section. The reference to this jurisdiction under the section pertaining to foreign-source income exemption (FSIE) regimes is however maintained. The deadline for fulfilling this commitment (which was also made by four other jurisdictions) is 31 December 2022.
Annex II also features two new commitments in the context of the work of the FHTP on harmful preferential tax regimes: both Armenia and Eswatini committed to abolish or amend their preferential tax regimes by 31 December 2023. The rest of Annex II remains unchanged.
The EU list of non-cooperative jurisdictions for tax purposes was established in December 2017. It is part of the EU’s external strategy on taxation and aims to contribute to ongoing efforts to promote tax good governance worldwide.
Jurisdictions are assessed on the basis of a set of criteria laid down by the Council. These criteria cover tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting. Work on the list is a dynamic process. Since 2020, the Council updates the list twice a year. The next revision of the list is scheduled for February 2023.
The list is set out in Annex I of the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes. The conclusions also include a state-of-play document (Annex II) identifying cooperative jurisdictions which have made further improvements to their tax policies or related cooperation.
The Council’s decisions are prepared by the Council’s Code of Conduct Group which is also responsible for monitoring tax measures in the EU member states. The Chair of the Group maintains regular dialogue with jurisdictions concerned. More information on its work is published in the Code of Conduct Group report to the Council.
- Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes
- Code of Conduct Group report to the Council
- EU list of non-cooperative jurisdictions (background information)
- Code of Conduct Group (Business Taxation)
Source – EU Council