The European Union announced that it will remove Aruba, Bermuda and Barbados from its blacklist of tax havens following plans by these jurisdictions to make changes to their corporate tax regulations.
As explained by Bloomberg Tax, “under the EU’s fair corporate tax criteria, a company should have “economic substance” in the relevant territory, and must not be a letterbox firm that has been set up to take advantage of low or zero corporate tax rates.”
According EU documents obtained by Bloomberg, Bermuda will modify its rules on “economic substance in the area of collective investment funds by the end of 2019.”
Aruba and Barbados will follow through with the necessary changes as well, which means the EU will officially remove the only of its territories that are still included in the blacklist of non-cooperative tax jurisdictions.
In Barbados’ case, the territory’s Minister for international business and industry sent a series of documents to the EU’s Code of Conduct Group Chair (COCG) last month “committing to amend or abolish by the end of 2019 the measure of similar effect that replaced its harmful preferential regimes and which the COCG had identified on 30 January 2019 as falling under criterion 2.2.”
Furthermore, despite having made changes to its corporate tax laws, Dominica will remain on the EU blacklist of non-cooperative tax regulations as it still fails to meet EU rules on transparency and “the exchange of bank information of non-resident account holders.”
Bermuda Responds to Exclusion from EU’s Tax Haven Blacklist
Curtis Dickinson, Bermuda’s Finance Minister, welcomed his jurisdiction’s exclusion from the tax haven blacklist and vowed to work with the EU to further comply with its corporate tax requirements.
Dickinson said: “When Bermuda is removed from Annex 1, we will be placed in Annex 2 of the EU list. This is because of EU concerns regarding the need for a legislative framework for collective investment funds that meets their expectations.”
According to Pedro Gonçalves of International Investment, Dickison mentioned that “the Government had promised to continue to co-operate with the EU over the adoption of a "proper legislative framework" for collective investment funds by the end of the year.”
Bermuda had originally been placed on the blacklist as a result of a typographical error in the documents submitted to the EU on the island’s economic substance rules.
With regards to this mistake, Dickinson said: “This omission was addressed and corrected to the satisfaction of the European authorities,” adding that he “can report that Bermuda has acted promptly and effectively in order to be formally removed from the EU list.”
The EU will approve of these changes when they meet today (May 17) as part of the ECOFIN meeting of European finance ministers.
The following jurisdictions will still remain on the EU’s tax haven blacklist: American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, UAE, US Virgin Islands and Vanuatu.
Any thoughts on the UAE’s continued inclusion in the EU tax haven blacklist? Is the country moving to get itself removed?
Share your thoughts with us below!