EU Delaying Talks To Expand Tax Haven List Due To Pandemic

By Joseph Boris
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Law360 (June 18, 2020, 8:09 PM EDT) -- Leaders of European Union member governments said talks on possibly expanding the bloc's list of tax havens will be postponed until October at the earliest because of the coronavirus pandemic.

The European Council also recommended Wednesday that the EU finance ministers group move to mid-2021 its deadline for reviewing how tax havens are selected. The ministers' current deadline is Dec 31.

The council's actions endorse recommendations received last week from the Code of Conduct Group, the EU body that recommends jurisdictions for the so-called blacklist. The group had said that responding to the pandemic would continue to dominate the council's attention and that discussion about the list would best be left until after Germany assumes the rotating council presidency from Croatia on July 1.

The council said in a report that its 27 government heads had recently discussed options for reorganizing their forthcoming workload in light of the crisis surrounding COVID-19, the respiratory disease caused by the virus.

"As a matter of principle, some delegations considered work on EU listing issues as a priority and therefore suggested postponing work items only on a case-by-case basis," said the report, issued June 5.

The council said, however, that when the group of EU finance ministers — the Economic and Financial Affairs Council, or Ecofin — meets in October, its agenda on what formally are called uncooperative tax jurisdictions will be limited. Discussion is expected to focus on removing from the blacklist jurisdictions that have completed commitments to comply with EU rules, extending deadlines for those with commitments in progress, and examining peer reviews on tax transparency and information exchanges via the Organization for Economic Cooperation and Development.

"No further change to the list is foreseen until October," Maria Tomasik, a spokeswoman for the council, told Law360.

Since the blacklist was first presented in December 2017, the Code of Conduct Group has come under frequent criticism, from tax-transparency advocates as well as some members of the European Parliament, for limiting it to tax havens outside the EU.

The most recent changes to the list were made on Feb. 18, when the Cayman Islands, Palau, Seychelles and Panama were added. The current list consists of those four jurisdictions plus American Samoa, Fiji, Guam, Samoa, Oman, Trinidad and Tobago, Vanuatu and the U.S. Virgin Islands.

According to the June 5 council report, Ecofin is to consider expanding the criteria for non-EU jurisdictions that wish to avoid being placed on blacklist. The ministers will look into adding a requirement that jurisdictions share information on beneficial ownership of assets, the report said, noting that several EU countries support revising how the bloc determines which jurisdictions are uncooperative.

The council suggested that Ecofin wait until a year from now to begin its reviews of those criteria. It also recommended less-specific delays for other list-related work by the finance ministers: screening Argentina, Mexico and Russia under a process begun in 2019; screening jurisdictions that have enacted rules on foreign-source income exemptions; and monitoring implementation of OECD minimum standards for country-by-country reporting by multinational corporations and the organization's base erosion and profit shifting project.

--Editing by John Oudens.

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