The European Union (EU) has adopted a 'blacklist' of 17 non-EU countries and territories deemed to be 'tax havens'.
Tax havens
After 10 months of negotiations, on December 5th, finance ministers of the European Union (EU) approved a “blacklist” of 17 non-EU countries and territories deemed “tax havens.” According to Reuters, the list includes:
American territory of Samoa in the Pacific.
Guam, a US territory in the Pacific Ocean.
Bahrain
Barbados
Grenada
Korean
Macau (China)
Marshall Islands
Mongolia
Namibia
Palau
Panama
Saint Lucia
Samoa
Trinidad & Tobago
Tunisia
United Arab Emirates (UAE).
French Finance Minister Bruno Le Maire said that countries and territories named on the “blacklist” may not receive EU funding. Further sanctions will be announced in the coming weeks. In addition, the EU has also compiled a list of 47 countries and entities deemed to be non-compliant with EU tax standards but committed to making changes. The list of 17 “tax havens” is the latest international effort to reduce tax evasion – increasingly seen as a moral issue – following the Organization for Economic Cooperation and Development (OECD) compilation of a list of “uncooperative tax havens.” The idea of creating a common EU list of “tax havens” originated in April 2016, following the “Panama Papers” leak, in which the International Consortium of Investigative Journalists (ICIJ) exposed a global tax evasion system. Over the past year, the EU has debated extensively but has yet to agree on a “blacklist.” Smaller, low-tax EU countries like Ireland, Malta, and Luxembourg fear the list would scare off multinational corporations. The UK is also particularly opposed to the list, fearing that overseas territories like Jersey and the Virgin Islands could be included. The “Paradise Papers” leak last month has given renewed impetus to the plan to create the list. EU countries remain divided on whether to impose financial sanctions on the countries on the list, or whether the list should be purely critical. Some countries, including France, support tough sanctions against the tax havens on the list. These could include denying the list access to EU and World Bank funding. Many others have expressed reluctance to impose general sanctions, arguing that it would be better for EU members to impose sanctions unilaterally. The OECD's current list of "tax havens" includes only one country: Trinidad & Tobago. Meanwhile, the EU initially targeted a total of 92 countries and entities, including the US. However, the named countries also have the opportunity to be removed from the list if they provide a political commitment and a detailed plan to comply with the regulations.
Learn more about tax havens.
A tax haven or tax oasis is a country or territory that does not levy taxes or levy very low taxes on income or property, making it a tax-attractive location for individuals to reside or for businesses to be headquartered. The Organization for Economic Cooperation and Development (OECD) identifies three key factors in considering whether an area is a tax haven:
No taxes or virtually no taxes. Tax havens make them places where non-residents can avoid paying high taxes in their own country.
Protecting personal financial information. Tax havens often have laws or administrative procedures whereby businesses and individuals can benefit from strict regulations and other protections against surveillance by foreign tax authorities. This prevents the transmission of information about taxpayers benefiting from low-tax areas.
Lack of transparency. A lack of transparency in the operation of legal, statutory, or administrative regulations is a factor used to determine tax havens. The OECD argues that laws must be applied publicly and consistently, and must provide the necessary information for foreign tax authorities to determine the status of taxpayers. A lack of transparency within a country can make it difficult or impossible for other tax authorities to effectively apply the law. 'Secret rulings,' negotiable tax rates, or other practices that do not apply the law publicly and consistently are always examples of a lack of transparency. Limited oversight of the law or a lack of legal access to government financial records are considered contributing factors.
"Tax haven" is also a term used to describe the concept of an "Offshore Zone".
The concept of "offshore zones" originated in ancient times. At that time, to avoid taxes, merchants flocked to the Greek island of Delos in the Mediterranean Sea to conduct trade. In the late 1950s, in the United States, the idea of establishing a financial institution registered outside of government-controlled areas to avoid taxes was proposed. This is considered the "birthplace" of the offshore zone. Since Switzerland enacted banking laws strictly protecting deposits there, the country has been considered the first "tax haven" of our time. In the 1960s, offshore zones were also established in some former British colonies. Due to the "leniency" of offshore zones, stemming from the desire of countries to "hold money without paying interest," foreign legal entities and individuals flocked there for the following main purposes: Firstly, to evade or avoid taxes; Secondly, it's to "avoid" the official owner of the legal entity established in the Offshore Zone through nominal shareholders and directors, and finally, to "bypass" cumbersome and complex procedures in the home country such as managing and exchanging foreign currency... Along with the process of globalization, dozens, even hundreds, of Offshore Zones have existed and continue to exist across the planet...www.expertis.vn
