The aim is to publish the definitive list of non-cooperative jurisdictions by the end of 2017
The European Commission is drawing up a first common EU list of non-cooperative tax jurisdictions by presenting a pre-assessment of all third countries according to key indicators (“scoreboard of indicators”).
Now EU Member States can choose which countries should be screened more fully over the next months so as to spot the countries which do not play by the tax rules. A common EU list of non-cooperative jurisdictions will have much more importance than the current national lists and will prevent aggressive tax planners from abusing mismatches between the different national systems.
The aim is to publish the definitive list of non-cooperative jurisdictions by the end of 2017.
The scoreboard of indicators
The Commission’s scoreboard helps Member States to determine which countries the EU should match regarding tax good governance issues. It has been planned to inform Member States’ choices when deciding which countries they should begin screening.
All non-EU countries and tax jurisdictions in the world were analysed to determine their risk of facilitating tax avoidance. This pre-assessment was based on a wide range of neutral and objective indicators, including economic data, financial activity, institutional and legal structures and basic tax good governance standards. As a first step, the scoreboard presents information on every country under three neutral indicators:
- economic ties to the EU
- financial activity
- stability factors.
The pre-assessment does not represent any judgement of third countries, nor a preliminary EU list. Countries can feature high in the scoreboard’s indicators for a number of reasons. The intention is to help Member States to narrow their focus when deciding which countries to screen in more detail from a tax good governance perspective. The EU will work closely with the OECD during the listing process, and will take into account the OECD’s assessment of jurisdictions’ transparency standards.
The pre-assessment was presented to Member State experts in the Council Code of Conduct Group on Business Taxation on 14 September 2016. Based on the results, the Code of Conduct Group will decide on the relevant jurisdictions to examine, which should be endorsed by finance ministers before the end of the year. The exam of the selected countries should begin January 2017, with a step to having a first EU list of non-cooperative tax jurisdictions before the end of 2017.
The new EU listing process is part of the EU’s campaign to clamp down on tax evasion and avoidance and promote fairer taxation, within the EU and globally. The External Strategy sets out a clear, fair and objective EU process for listing based on three steps:
The Commission produces a neutral scoreboard of indicators, to help determine the potential risk level of each third country’s tax system in facilitating tax avoidance.
On the basis of the scoreboard results, Member States decide which third countries should be formally screened by the EU. The screening of third countries’ tax good governance standards will be carried out by the Commission and the Code of Conduct Group. There will be a dialogue process with the countries in question, to allow them to react to any concerns raised or discuss deeper cooperation with the EU on tax matters.
Once the screening process is complete, third countries that refused to cooperate or engage with the EU regarding tax good governance issues could be put on the EU list.
The common EU list is intended as a tool to deal with third countries that refuse to respect tax good governance principles, when all other attempts to engage with these countries have failed.
Author: EMILIO MENEGHELLA