EU Names, Shames 17 States Deemed
International Tax Havens
December 6, 2017
The European Union named and shamed 17 states that it accuses of being
tax havens Tuesday, and put another 47 countries on notice that they
risk being blacklisted, too, unless they start tackling tax evasion.
The blacklist was agreed on after 10 months of investigations and
diplomatic wrangling, but transparency activists say it doesn't go far
After a meeting in Brussels, EU finance ministers announced the
The list doesn't include any European countries, but does name several
Caribbean islands, including former British colonies Barbados, Grenada,
and Trinidad and Tobago — a reflection, analysts say, of Britain's
reduced political clout in the European Union.
Completing the list are American Samoa, Bahrain, Guam, South Korea,
Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia,
Samoa, Tunisia and the United Arab Emirates.
Countries on the list could lose access to EU funds and face further
as-yet-undetermined sanctions from the economic bloc.
"To be on a blacklist is, in itself, bad enough and, of course, there
will be consequences for these countries," said Luxembourg's finance
minister, Pierre Gramegna.
Immediate consequences will be felt by multinationals that do business
with any of the blacklisted jurisdictions, as they will face additional
and burdensome financial disclosure requirements.
The EU move, part of a broader effort to tackle tax evasion, comes less
than a month after the publication of the so-called Paradise Papers, an
investigation by nearly 100 media outlets into a leak of 13.4 million
files from two offshore service providers.
British officials drew comfort from the exclusion of the Cayman Islands
and Bermuda from the list; but their omission prompted an outcry from
transparency activists, who dubbed the exercise a "whitewash." Other
transparency campaigners, including Oxfam, argue the blacklist should
have included well-established EU tax havens: Ireland, Luxembourg, the
Netherlands and Malta, as well as Switzerland.
Another 47 jurisdictions were included Tuesday in a "grey list." Among
those are other British-tied jurisdictions, the Isle of Man and Jersey.
The finance ministers deemed them as not currently compliant with EU
standards, but all have formally committed to changing their tax rules.
Critics of list
The Tax Justice Network, an advocacy group that campaigns against tax
avoidance and corruption, said the European Union had flunked the tax
haven test, arguing it had missed an opportunity.
"The list appears to be a politically-led list, that includes only the
economically weak and politically unconnected," it said. The blacklist
is hard to take seriously, it added, saying, "EU members like the
Netherlands, Ireland and Luxembourg are the greatest procurers of global
profit-shifting, but are excluded."
Pierre Moscovici, the European commissioner for economic and financial
affairs, dismissed the complaints, describing Tuesday's naming and
shaming as a vital "first step."
"This list represents substantial progress. Its very existence is an
important step forward," he said, adding, "It is the first EU list; it
remains an insufficient response to the scale of tax evasion worldwide."
Toomas Toniste, Estonia's finance minister, agreed that the list was an
"This initiative is already proving its value, as numerous countries
have worked to meet the deadline for making commitments on the basis of
our criteria," he said.
Pushing for change
In the past few weeks, countries at risk of inclusion have been
scrambling to promise reforms. To remain off the list, countries had to
promise to implement "fair tax rules," which Brussels defines as not
offering preferential treatment for companies enabling them to move
profits to avoid taxes elsewhere. They also had to pledge to meet
international transparency standards of the Organization for Economic
Co-operation and Development, or OECD.
Hours before the list was announced, officials from Panama, Samoa, Guam
and the Marshall Islands said they thought they had done enough to
escape being blacklisted. Several of the named Caribbean islands
appealed for exclusion on the basis of the devastation they suffered
this year from hurricanes. Several other hurricane-impacted Caribbean
islands have been put on probation and their cases will be addressed in
opposition lawmakers in Britain accused the British government of being
weak on tax avoidance, criticizing London's diplomatic efforts to
persuade EU finance ministers to go easy on the Caribbean islands.
Liberal Democrat leader Vince Cable accused Downing Street of helping
the super-rich hide their cash.
Cable argued the British government had a long history of "dragging its
heels" when it comes to tax havens, saying he witnessed a lack of action
when he was in government.
"Some Caribbean islands in particular were operating to very poor
standards, sometimes to the cost of the British government," the former
business secretary said.
British officials dismiss such accusations, saying London is at the
forefront of tackling avoidance and ensuring tax transparency.