Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Joe Kirwin
Dec. 5 — The European Union has targeted 28 jurisdictions considered to have harmful tax regimes, nations that will potentially face scrutiny in early 2017 as part of the process to define its tax haven blacklist.
Based on documents seen by Bloomberg BNA, the 28 countries targeted by the EU Code of Conduct Group for Business Taxation include a range of Pacific or Caribbean nations with offshore financial centers. Among them is Belize, Grenada, Cook Islands, Montserrat, Cabo Verde, Dominica, Saint Kitts and Nevis, Macao, Saint Lucia and Samoa.
According to the confidential document, Anguilla, Bahamas, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man and Jersey have been cited for potential screening by the Code of Conduct group in 2017, on account of their zero tax rates.
Thirteen of the 28 are considered particularly problematic due to their failure to commit to the OECD’s Inclusive Framework for implementing the minimum base erosion and profit shifting reforms.
“The Code of Conduct group has a solid and proven experience in dealing with harmful tax regimes, including regimes of third countries,” the confidential document states. “Assessments of these 28 countries could be undertaken autonomously by the Code of Conduct group with the assistance of the commission and experts in the review panels with a commitment to produce the outcomes in time for the final list.”
The EU tax haven screening criteria is stricter than the ongoing tax haven screening process initiated by the Organization for Economic Cooperation and Development at the request of the Group of 20, set for completion by the end of 2017.
It includes assessment of preferential or harmful tax regimes, implementation of BEPS reforms and potentially zero corporate tax rates.
The OECD process only targets countries or jurisdictions that don’t abide by two of three “transparency criteria,” which include a commitment to the OECD Common Reporting Standard for automatic information exchange of bank information, information exchange of bank information on request and ratification of the OECD Convention on Mutual Administrative Assistance.
In an effort to counter complaints for going beyond the OECD process, the conduct group has agreed to a series of measures to “ensure consistency’’ with the Paris-based Global Forum, including the use of the BEPS Inclusive Framework process, designed partly to help developing countries implement four minimum BEPS reforms.
“Jurisdictions engaged in the G-20/OECD Inclusive Framework on BEPS will be subject to a scrutiny of their preferential regimes,” according to the Code of Conduct Group document.
However, it adds that EU will conduct its own evaluations’ on a “thematic’’ basis.
The preferential tax regimes employed by the 28 countries aren’t specified. But overall, they include a range of measures, including many that EU member countries were forced to phase out over the past two decades. These include zero tax rates on foreign income, tax coordination centers, risk reserves for international group financing, international trading companies and foreign sales corporations.
Besides targeting harmful tax regimes as part of a “fair taxation’’ criteria, the EU is considering whether to target foreign countries or jurisdictions that have zero tax rates.
It is due to draw up an “economic substance’’ test that will determine whether the zero rates are set up to “facilitate offshore structures or arrangements aimed at attracting profits that do not reflect real economic activity.”
To contact the reporter on this story: Joe Kirwin in Brussels at email@example.com
To contact the editor responsible for this story: Penny Sukhraj at firstname.lastname@example.org
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)