rocket
Orbitax subscribers can now easily follow the latest COVID-19-related tax measures being implemented worldwide. New to Orbitax? Create a free account to access your dashboard and latest tax news.
News Share

The Tax Hub

Daily Tax Newsletter

European Union

25 January 2021

Responsive image

European Parliament Pushing for Changes in System Used for Tax Haven Blacklist

The European Parliament has announced a resolution pushing for changes in the system used for including jurisdictions in the EU tax haven blacklist (the list of non-cooperative jurisdictions), which is currently viewed as "confusing and ineffective".

---

EU tax haven blacklist is not catching the worst offenders

  • Criterion to judge if a country’s tax system is fair or not needs to be widened
  • Countries should not be removed from the blacklist if they only make symbolic tweaks
  • A 0% tax rate policy should automatically lead to being placed on the blacklist
  • List has to be formalised through a legally binding instrument by end 2021

MEPs adopted a resolution pushing for the system used to draw up the EU list of tax havens to be changed, as it is currently "confusing and ineffective".

The EU’s list of tax havens, set up in 2017, has had a "positive impact" so far but has failed to "live up to its full potential, [[]with[]] jurisdictions currently on the list covering less than 2% of worldwide tax revenue losses", MEPs said. The resolution, adopted in plenary on Thursday by 587 votes in favour, 50 against and 46 abstentions, calls the current system "confusing and ineffective". It rounds up the debate held on Wednesday evening with the Council Presidency and the Commission.

MEPs propose changes that would make the process of listing or delisting a country more transparent, consistent and impartial. Criteria should be added to ensure that more countries are considered a tax haven and to prevent countries from being removed from the blacklist too hastily, they say. EU member states should also be screened to see if they display any characteristics of a tax haven, and those falling foul should be regarded as tax havens too (PARA 9).

Quote

After the vote, the Chair of the Subcommittee on Tax Matters, Paul Tang (S&D, NL) said:

By calling the EU list of tax havens "confusing and inefficient", the Parliament tells it like it is. While the list can be a good tool, member states forgot something when composing it: actual tax havens. The truth is, the list is not getting better, it's getting worse. Guernsey, the Bahamas and now the Cayman Islands are only some of the well-known tax havens that member states have taken off the list. In refusing to properly address tax avoidance, national governments are failing their citizens to the tune of over €140 billion. Especially in the current context, this is unacceptable.

That is why the parliament strongly condemns the recent delisting of the Cayman Islands and calls for more transparency and stricter listing criteria. However, if we focus on others, we also need to look ourselves in the mirror. The picture is not pretty. EU countries are responsible for 36% of tax havens.

Widen the scope

Parliament says that the criterion for judging if a country’s tax system is fair or not needs to be widened to include more practices and not only preferential tax rates. The fact that the Cayman Islands has just been removed from the black list, while running a 0% tax rate policy, is proof enough of this, MEPs say. Among other measures proposed, the resolution therefore says that all jurisdictions with a 0% corporate tax rate or with no taxes on companies’ profits should be automatically placed on the blacklist.

Tougher requirements

Being removed from the blacklist should not be the result of only token tweaks to that jurisdiction’s tax system, MEPs say, arguing that for example the Cayman Islands and Bermuda were delisted after "very minimal" changes and "weak enforcement measures". The resolution therefore calls for screening criteria to be more stringent.

Fairness and transparency

All third countries need to be treated and screened fairly using the same criteria, MEPs say, stressing that the current list indicates that this is not the case. The lack of transparency with which it is drawn up and updated adds to these misgivings. They call for the process of establishing the list to be formalised through a legally binding instrument by the end of 2021 and question whether an informal body such as the Code of Conduct Group is able or suitable to update the blacklist.

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Translate Documents

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More