Turkey could once again escape being placed on the European Union’s ‘blacklist’ of uncooperative tax jurisdictions, although it has not fully aligned with the requirements set by the EU Council in February 2021 to be taken off the list (see EUROPE 12659/1).
In May, the Turkish authorities committed to activate automatic exchange of tax information with all Member States with which they have diplomatic relations, i.e. 26 countries except Cyprus.
However, the EU Council had asked Ankara to set up these exchanges with the EU27, in particular Germany, Austria, Belgium, Cyprus, France, and the Netherlands, which did not benefit from them.
“Turkey’s progress is not fully in line with the required commitments”, notes a draft EU Council conclusion on the agenda of the meeting of Member States’ ambassadors to the EU (Coreper) on Wednesday 29 September.
The Turkish authorities are requested to resolve all technical issues by the end of 2021 and to respect the timetable for the transmission of information, i.e. the deadlines of 30 September 2021 and 30 September 2022 for the fiscal years 2020 and 2021, respectively.
However, in its report accompanying the draft conclusions, the Council’s Code of Conduct Group on Business Taxation is of the opinion that Turkey should remain on the ‘grey’ list of third countries that have made commitments on automatic exchange of tax information.
Three third countries to be removed from the ‘blacklist’
The Ecofin Council, which will meet on Tuesday 5 October in Luxembourg, is expected to be asked to remove three new third countries—Anguilla, Dominica, and the Seychelles—from the EU’s ‘blacklist’.
All three have undergone an additional assessment of their tax systems by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. The Seychelles has also resolved the issue of preferential tax treatment for offshore companies.
These three third countries should therefore be included in the ‘grey’ list of countries or jurisdictions that have made tax commitments.
The EU ‘blacklist’ is expected to therefore be reduced to the following countries: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands, and Vanuatu.
Several entries and exits from the ‘grey’ list
EU Finance Ministers should also be asked to amend the ‘grey’ list of third countries that have made commitments to automatic exchange of tax information.
Jordan, Eswatini, Botswana, and the Maldives should be removed from part 1.3 (ratification of the OECD Multilateral Convention on Administrative Assistance) of the ‘grey’ list.
Hong Kong, Malaysia, Costa Rica, and Qatar should be included in part 2.1 (existence of harmful tax regimes) of the ‘grey’ list, as they have committed to ending their preferential treatment of foreign accrued income (FSIE). Australia and Jordan have reportedly been removed.
See the report of the Code of Conduct Group: https://bit.ly/2XVCxrg
See the draft conclusions: https://bit.ly/3ie9nv8 (Original version in French by Mathieu Bion)