The European Union has added Russia to its blacklist of tax havens, a largely symbolic move given Moscow is already subject to economic sanctions linked to the invasion of Ukraine. The list updated on February 14 now includes 16 countries. In addition to Russia, Costa Rica, the British Virgin Islands and the Marshall Islands were also added. The new list therefore includes: American Samoa, Anguilla, Bahamas, British Virgin Islands, Costa Rica, Fiji, Guam, Marshall Islands, Palau, Panama, Russia, Samoa, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands and Vanuatu.
How the EU blacklist works
The List of Non-Cooperative Tax Jurisdictions was created in December 2017 to promote good governance in tax matters worldwide. Jurisdictions are assessed against a set of criteria established by the Council in 2016. These criteria include tax transparency, fair taxation and the implementation of international standards designed to prevent base erosion and profit shifting. Since 2020, the Council has updated the list twice a year.
Countries that have made commitments to the EU
In addition to the list of non-cooperative jurisdictions for tax purposes, Ecofin approved the usual progress report (Annex II), which reflects the EU’s ongoing cooperation with its international partners and the commitments of these countries to reform their legislation to meet agreed standards on tax responsible action. Its aim is to recognize the constructive work under way in the tax area and to promote the positive approach taken by cooperative jurisdictions in applying tax good governance principles. 18 countries belong to this annex. The EU will closely monitor these commitments to ensure they are met, Ecofin said in a statement. Currently, Barbados, Jamaica, North Macedonia and Uruguay have fulfilled their commitments and could therefore be removed from the document. Hong Kong and Malaysia were granted an extension to complete the reform of their foreign-source income exemption regimes in relation to capital gains. Qatar, on the other hand, has a month and a half to comply with the EU parameters of tax cooperation. The emirate should have already amended or removed the derogation for foreign-source income deemed “harmful” by the EU, but as the Ecofin note says, “it has had to face the constraints of constitutional reform.” For this reason, EU ministers have decided to give the country some time to adjust its legislation.