COUNCIL CONCLUSIONS

on the EU list of non-cooperative jurisdictions for tax purposes (*1)

(2017/C 438/04)

THE COUNCIL OF THE EURPEAN UNION

RECALLS the Council Conclusions on an external taxation strategy and measures against tax treaty abuse of 25 May 2016, in particular points 6 to 10 thereof, and the Council Conclusions of 8 November 2016 on the criteria for and process leading to the establishment of the EU list of non-cooperative jurisdictions for tax purposes;

EMPHASISES the importance of promoting globally the criteria on tax transparency, fair taxation and implementation of anti-BEPS standards, which were endorsed by the Council Conclusions of 8 November 2016 (‘the Criteria’), as set out in Annex V hereto, and as further specified in Annexes VI and VII;

TAKES STOCK of the work achieved by the Global Forum on Transparency and Exchange of Information for Tax Purposes, the OECD Inclusive Framework for Tackling Base Erosion and Profit Shifting (BEPS), and the Forum on Harmful Tax Practices;

WELCOMES the work that the Code of Conduct Group on Business Taxation (‘Code of Conduct Group’) has carried out, in coordination with the High-Level Working Party on Tax Questions (‘the HLWP’), in selecting the relevant jurisdictions and analysing and assessing the facts pertaining to their tax legislation and policies in the context of the Criteria;

WELCOMES the fact that most of these jurisdictions have chosen to participate in this process and dialogue, and have taken or undertaken to take active steps towards resolving the issues that the Code of Conduct Group has identified in the areas of tax transparency, fair taxation and implementation of anti-BEPS standards;

NOTES, nonetheless, that a number of jurisdictions have taken no meaningful action to effectively address the deficiencies and do not engage in a meaningful dialogue on the basis of the Criteria that could lead to such commitments;

IS CONVINCED that, in such a case, the tax legislation, policies and administrative practices of these jurisdictions result or may result in a loss of tax revenues for Member States and that such jurisdictions should therefore be strongly encouraged to make the changes needed to remedy this situation;

REITERATES that it is of crucial importance to provide efficient protection mechanisms to fight against the erosion of Member States' tax bases through tax fraud, evasion and avoidance;

ENDORSES, accordingly, the EU list of non-cooperative jurisdictions for tax purposes, as set out in Annex I, and CONFIRMS that jurisdictions will remain on this list until they meet the Criteria, for example, by fulfilling the recommendations on the steps to take in order to be de-listed;

DEEMS IT APPROPRIATE for the Code of Conduct Group to engage in discussions with the listed jurisdictions, with a view to agreeing and monitoring the steps that jurisdictions are expected to take in order to be removed from the list and ENCOURAGES these jurisdictions to swiftly take the action needed to meet the Criteria;

NOTES WITH SATISFACTION that while the tax legislation, policies and administrative practices of some jurisdictions present concerns in the areas of tax transparency, fair taxation and implementation of anti-BEPS standards, a number of these jurisdictions have nevertheless made meaningful commitments at high political level to take the necessary steps to solve the outstanding issues by the agreed deadlines and so should not, at this stage, be placed on the list of non-cooperative jurisdictions. The Code of Conduct Group should continue dialogue and monitoring the actual implementation of the commitments made by these jurisdictions and should recommend at any time to update the list of non-cooperative jurisdictions for tax purposes based on any new commitment taken and on the implementation of these commitments. The state of play of the cooperation with the EU with respect to commitments taken to implement tax good governance principles is set out in Annex II;

EXPRESSES its sympathy and support to the jurisdictions in the Caribbean region that were severely struck by devastating storms in September 2017, causing casualties and major damage to key infrastructure, and HOLDS THE VIEW that the screening process should be put on hold for these jurisdictions (Anguilla, Antigua and Barbuda, Bahamas, British Virgin Islands, Dominica, Saint Kitts and Nevis, Turks and Caicos Islands, US Virgin Islands). Nevertheless, the Code of Conduct Group should, by February 2018, pursue further contacts with these jurisdictions, with the view to resolving these concerns by the end of 2018;

ASKS, in particular, that the Code of Conduct Group continues the dialogue and starts the monitoring process of the commitments made by jurisdictions without delay, as of the beginning of 2018, to ensure their effective implementation according to the agreed timeline.

CALLS UPON the Code of Conduct Group to agree on procedures to carry out the monitoring process and to prepare a progress report on this matter before summer 2018.

INSTRUCTS the Code of Conduct Group accordingly to engage in or continue discussions with relevant jurisdictions, to seek the necessary commitments to monitor whether these commitments are being met, and regularly to report back to the Council, as appropriate, with suggestions concerning modifications to the list of non-cooperative jurisdictions;

TAKES THE VIEW, as set out in Annex III, that effective and proportionate defensive measures, in both non-tax and tax areas could be applied by the EU and Member States vis-à-vis the non-cooperative jurisdictions, as long as they are part of such list;

RECOMMENDS that Member States take certain coordinated defensive measures in the tax area as set out in Annex III hereto, in accordance with their national law and in accordance with the obligations under EU and international law;

CALLS UPON the Code of Conduct Group to continue exploring further coordinated measures in tax area and INVITES the Member States to inform the Code of Conduct Group on whether and how they apply defensive measures vis-à-vis the non-cooperative jurisdictions, as long as they are part of such list;

INVITES the EU institutions and Member States, as appropriate, to take the EU list of non-cooperative jurisdictions for tax purposes into account in foreign policy, economic relations and development cooperation with the relevant third countries, to strive for a comprehensive approach as regards to the issue of compliance with the Criteria, without prejudice to the respective spheres of competence of the Member States and of the Union as resulting from the Treaties;

BELIEVES that the list of non-cooperative jurisdictions and the defensive measures, when applicable, will have the effect of sending a strong signal to the jurisdictions concerned, thus encouraging a positive change leading to the removal of jurisdictions from the list;

CONFIRMS that these actions collectively taken by the EU Member States are in line with the agenda promoted by the G20, the OECD and other international fora;

RECALLS the agreement of the Council on the approach to the absence of a corporate tax system or applying a nominal corporate tax rate equal to zero or almost zero in the context of the criterion that requires a jurisdiction not to facilitate offshore structures or arrangements aimed at attracting profits which do not reflect real economic activity in the jurisdiction, as set out in Annex VII;

RECALLS that, in line with the Council Conclusions of 8 November 2016, these actions are without prejudice to the respective spheres of competence of the Member States, such as the competence to negotiate and agree bilateral tax treaties, apply additional measures or maintain lists of non-cooperative jurisdictions at national level with a broader scope;

CONFIRMS that a decision on modification of the list will be taken by the Council, on the basis of the relevant factual information made available to the Council by the Code of Conduct Group;

NOTES that the list of non-cooperative jurisdictions should be updated at least once per calendar year, and the situation should be continuously monitored in the listed jurisdictions, as well as in other jurisdictions covered by the 2017 screening exercise. On the basis of criteria agreed by the Council, monitoring could be extended, by the Code of Conduct Group, to other jurisdictions;

INVITES the Code of Conduct Group to continue dialogue with relevant jurisdictions to promote tax transparency, fair taxation and implementation of anti-BEPS standards; and to continue the work on analysis of defensive measures that could be further defined and applied to non-cooperative jurisdictions in a coordinated manner, without prejudice to Member States' obligations under EU and international law;

REITERATES that the Code of Conduct Group, supported by the General Secretariat of the Council, should continue to conduct and oversee this process, in coordination with the HLWP. The Commission will assist the Code of Conduct Group by carrying out the necessary preparatory work for the screening process in accordance with the roles as currently defined under the Code of Conduct for Business Taxation, with particular reference to previous and ongoing dialogues with third countries;

DEEMS IT APPROPRIATE, in this context, to determine the Guidelines for further work in this area, as set out in Annex IV;

CONFIRMS that the Criteria will be regularly updated, by the Council, as necessary, taking into account international developments and having regard to the evolution of international standards and TAKES THE VIEW that future assessment and dialogue with the jurisdictions concerned should be based on those standards bearing in mind the importance of continued and rapid progress by all relevant jurisdictions in these areas.

(*1) The Council agreed to publish these conclusions for information purposes in the Official Journal.

ANNEX I

The EU list of non-cooperative jurisdictions for tax purposes (1)

I. THE EU LIST OF NON-COOPERATIVE JURISDICTIONS FOR TAX PURPOSES

1. American Samoa

American Samoa does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

2. Bahrain

Bahrain does not cover all EU Member States for the purpose of automatic exchange of information, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, facilitates offshore structures and arrangements aimed at attracting profits without real economic substance, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

3. Barbados

Barbados has a harmful preferential tax regime and did not clearly commit to amending or abolishing it as requested by 31 December 2018.

Barbados' commitment to amend or abolish other harmful tax regimes in line with criterion 2.1 will be monitored.

4. Grenada

Grenada has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended and did not clearly commit to addressing these issues by 31 December 2018.

Grenada's commitment to comply with criteria 1.1, 2.1 and 3 will be monitored.

5. Guam

Guam does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

6. Korea (Republic of)

Korea has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018.

7. Macao SAR

Macao SAR has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended and did not commit to addressing these issues by 31 December 2018.

Macao SAR's commitment to comply with criteria 1.1 and 2.1 will be monitored.

8. Marshall Islands

Marshall Islands facilitates offshore structures and arrangements aimed at attracting profits without real economic substance, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

Marshall Islands' commitment to comply with criteria 1.1 and 1.2 will be monitored.

9. Mongolia

Mongolia is not a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2019.

10. Namibia

Namibia is not a Member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2019. Furthermore, Namibia has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018.

11. Palau

Palau facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and refused to engage in a meaningful dialogue to ascertain its compliance of with criterion 2.2.

Palau's commitment to comply with criteria 1.1, 1.2, 1.3 and 3 will be monitored.

12. Panama

Panama has a harmful preferential tax regime and did not clearly commit to amending or abolishing it as requested by 31 December 2018.

Panama's commitment to amend or abolish other harmful tax regimes in line with criterion 2.1 will be monitored.

13. Saint Lucia

Saint Lucia has harmful preferential tax regimes, does not apply the BEPS minimum standards and did not clearly commit to addressing these issues by 31 December 2018.

14. Samoa

Samoa has harmful preferential tax regimes, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

15. Trinidad and Tobago

Trinidad and Tobago has been attributed a rating of ‘Non-Compliant’ by the Global Forum on Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters as amended, has a harmful preferential tax regime and did not commit to addressing these issues by 31 December 2018.

Trinidad and Tobago's commitment to comply with criteria 1.1 and 3 will be monitored.

16. Tunisia

Tunisia has harmful preferential tax regimes and did not commit to amending or abolishing them by 31 December 2018.

Tunisia's commitment to comply with criterion 3 will be monitored.

17. United Arab Emirates

The United Arab Emirates does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018.

United Arab Emirates' commitment to comply with criteria 1.1 and 1.3 will be monitored.

II. RECOMMENDATIONS TO JURISDICTIONS ON STEPS TO TAKE IN ORDER TO GET DE-LISTED

All listed jurisdictions are invited to effectively address the deficiencies set out in this Annex.

(1) On the basis of the responses received by 4 December 2017; 17:00 (UTC +01:00).