Europe keeps Panama on its list of tax havens, but removes the Bahamas, Seychelles, Belize and Turks and Caicos

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By Daniel Villatoro García

The European Union (EU) on Tuesday removed the Bahamas, Seychelles, Belize and Turks and Caicos from its blacklist of tax havens after these jurisdictions approved measures to improve their tax cooperation with the group of 27.

Following the decision adopted by the Member States, 12 territories appear in the directory: Panama , Russia, American Samoa, Anguilla, Antigua and Barbuda, Fiji, Guam, Palau, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

The list, which has been in operation since 2017 and is updated every six months, includes those jurisdictions that fail to comply with EU standards on tax transparency, tax fairness or implementation of international standards to avoid the erosion of the tax base or the transfer of benefits , and that they also do not take steps to address these problems.

Being included in it does not entail economic sanctions, beyond the prohibition of European funds transiting through entities located in these jurisdictions and administrative measures, such as more frequent audits, although States may decide at the national level to impose other types of penalties.

The EU decided to remove the Bahamas and Turks and Caicos from its list because the OECD has softened its recommendations to both countries due to their deficiencies in applying the rules on economic substance requirements – which prove that companies are actually active -, which has led the 27 to consider that they meet the standards set for jurisdictions without corporate tax or with a nominal tax only.

For their part, Belize and Seychelles had been included on the list after a negative evaluation by the OECD on their standards for the exchange of tax information. Given that both have applied changes that have led the OECD to grant them a new review “in the near future”, the EU has decided to remove them from the list until the results are available, as explained by the Council in a statement.

On the other hand, the EU has also updated the so-called “gray list”, which includes those jurisdictions that do not fully comply with the EU standards to be considered cooperatives, but that have committed to making changes to comply.

Israel and Aruba emerge from it after having undertaken the promised changes regarding the automatic exchange of financial information, as well as Albania and Hong Kong, after having amended tax regimes considered harmful by the EU.

Botswana and Dominica also no longer appear, after the OECD gave them a positive evaluation on the exchange of information on demand.

Of the four jurisdictions that have left the blacklist, Belize and Seychelles continue to appear in the gray list, awaiting the review of their information exchanges, along with eight other jurisdictions: Costa Rica, Turkey, Curaçao, the British Virgin Islands, Malaysia , Armenia, Eswatini and Vietnam.

Bahamas and Turks and Caicos, however, no longer appear in this repertoire.

The EU will update its list again next December.

This article was originally published in Spanish by La Prensa / EFE.