THE European Union (EU) blacklisted Russia, Costa Rica, the British Virgin Islands and the Marshall Islands as tax havens yesterday, bringing the total number of blacklisted countries to 16, the Council of the EU said.
The new list has already drawn criticism from experts.
‘Tax haven’ is the term used to describe a country or place where low or no taxes and financial secrecy and confidentiality are offered to individuals and companies that use these jurisdictions to reduce their tax liabilities or hide their wealth.
Swedish finance minister Elisabeth Svantesson, whose country holds the EU Council’s rotating presidency, requested the “listed countries to improve their legal framework and to work towards compliance with international standards in taxation”.
According to the statement, Russia was listed because last year it adopted a new legislation against the good tax governance and halted dialogue with the EU regarding taxation after its aggression against Ukraine.
The Marshall Islands had been put on the list in 2018 and then taken off, but now they are back again because of their low or zero corporate income tax, which is believed to be attracting profits without actual economic activity.
Costa Rica was put on the ‘grey list’ and given until the end of last year to abolish or amend its harmful foreign source income exemption regime. It didn’t do it.
The British Virgin Islands were listed because they failed to comply with the Organisation for Economic Co-operation and Development (OECD) standard on tax transparency.
Countries on the list may face restrictions and sanctions on their economic relations with the trade bloc.
The statement underlined the importance of promoting tax good governance, transparency, and fighting against tax fraud globally.
Chiara Putaturo, Oxfam’s EU policy adviser on tax, however, said the EU’s tax havens list “continues to be a total whitewash”.
“Not only did it de-list countries with zero corporate tax rates, like Bermuda and the Cayman Islands, but ignores EU tax havens, like Luxemburg, despite it being one of the most harmful tax havens in the world,” she said.
The next revision of the list is scheduled for October 2023.
– Organised Crime and Corruption Reporting Project
