In a move to restore the tax sanctity of nations including Seychelles, Dominica, and Anguilla, the European Union finance ministers have decided to remove these nations from the bloc's blacklist of tax havens next week.
The list, which was established in 2017 looks to counter widespread tax evasion and tax avoidance, and has been updated periodically to remove or add jurisdictions depending on their tax reforms.
According to EU tax experts, the delisting of the Caribbean island of Dominica, the British Caribbean territory of Anguilla and Seychelles, is mostly cleared after these nations committed to undergo a supplementary review of their tax systems with the Global Forum on Transparency and Exchange of Information for Tax Purposes, the leading international body on tax evasion.
The three jurisdictions are expected to be moved to the EU's ‘grey list' of countries that have shown commitment to tax reforms “pending the outcome of such supplementary review”, one EU document showed.
The decision will however need further approval from EU finance ministers at a meeting on October 5. They usually rubber-stamp tax recommendations, but in this case, one member state has expressed a reservation about one of the affected jurisdictions.
Seychelles has been widely described as a tax haven for its very favourable tax treatment of offshore companies. However, EU experts recommended its delisting “following the resolution of the issue concerning harmful preferential tax regimes.”
Panama wrote to the EU asking to be removed from the blacklist, but “regrettably lacking a commitment to repeal or amend their harmful FSIE regime,” the EU document shows. A foreign-source income exemption regime or FSIE exempts some foreign income from tax.
The draft conclusion of next week's finance ministers' meeting says Panama “has not resolved this issue yet.” States that are blacklisted are subject to stricter controls on transactions with the EU.
Under the new proposal, no country will be added to the blacklist, and Turkey will remain in the “grey list” as it continues to oppose the automatic exchange of tax information with EU member Cyprus.
If all the proposed changes are approved, the updated blacklist will comprise nine jurisdictions: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, the US Virgin Islands, and Vanuatu.