As a result of the November 2021 adoption of the Public Country-by-Country Reporting (CBCR) Directive (see EUROPE 12832/24), Member States will update the EU’s ‘grey’ list of third countries and jurisdictions that have made commitments to good tax governance.
Approved without debate on Wednesday 9 February by the EU Member States’ ambassadors (Coreper), a provisional list, which will be formally adopted at the Competitiveness Council on Thursday 24 February, includes ten new countries or territories: Russia, Belize, Israel, Tunisia, Vietnam, the Bahamas, Bermuda, Montserrat, the British Virgin Islands and the Turks and Caicos Islands.
In total, 25 countries will be on the ‘grey list’. Transparency, tax fairness and the prevention of tax base erosion and profit shifting are the three criteria assessed by the EU Council’s Code of Conduct Group on Business Taxation to form this list, which is reviewed every six months.
Regarding the last criterion, countries that do not meet it have nevertheless committed themselves to implement the provisions of the CBCR Directive by autumn 2023.
Russia and Turkey on the firing line
Russia, because of its preferential tax regime for international holding companies, is thus singled out for its lack of tax fairness. However, it has committed itself to changing this regime by 31 December 2022.
Another EU neighbour, Turkey, already on the European ‘grey’ list, has “still not fully aligned with the commitments required under the Ecofin Council conclusions of 22 February 2021 and 5 October 2021”, says the EU Council in its draft conclusions, a copy of which EUROPE has obtained (see EUROPE 12805/4). Ankara automatically exchanges tax information with all Member States except Cyprus, which it does not recognise.
The EU Council notes that “the effective automatic exchange of information with all Member States in accordance with the OECD timetable and standards is a condition that Turkey must meet to satisfy” [this criterion] and “be in full compliance with the stated requirements”.
However, the ‘black list’ of non-cooperative countries and jurisdictions for tax purposes will remain unchanged. It comprises nine jurisdictions: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu.
See the draft EU Council conclusions: https://aeur.eu/f/a4 (Original version in French by Anne Damiani)