Q: Who is Excluded from the EU Blacklisting Exercise?
A: A differentiated approach was followed according to the status of the jurisdictions. First, the 28 member states and the territories considered to be European Commission – DG Taxation and Customs Union – 13/09/2016 part of a Member State such as those covered by Article 355(1) TFEU are not included in the tables drawn from the scoreboard. Second, third country jurisdictions that already have a transparency agreement with the EU feature separately in the scoreboard. Currently, this covers Switzerland, Liechtenstein, Andorra, Monaco and San Marino. And finally, the 48 least developed countries (LDC) identified by the United Nations are also featured separately, in recognition of the particular constraints they face.
Q:What criteria did the EC use to create an initial blacklist of jurisdictions highly likely to facilitate tax avoidance?
The EC used three elements to distinguish the non-excluded jurisdictions. These distinguishing factors were:
- Strength of economic ties with the EU using indicators s trade data, affiliates controlled by EU residents and bilateral FDI flow.
- Level of financial activity to determine if a jurisdiction had a disproportionately high level of financial services exports, or a disconnection between their financial activity and the real economy. For this the EC relied on indicators such as total FDI, specific financial income flows and statistics on foreign affiliates were used.
- Stability factors which assessed whether jurisdictions would be considered by tax avoiders as a safe place to place their money; and general governance indicators such as the level of corruption and the quality of regulation in the jurisdiction.
Based on the scores received by the assessed jurisdictions in all three areas a final ranking was agreed.
Q: Once the level of economic relevance was determined, how did the EC determine whether a jurisdiction was highly likely to enable tax avoidance?
A: The EC used the following three factors to determine the risk profile of the assessed countries:
- The level of compliance with international Transparency and Exchange of information standards
- The existence of preferential tax regimes as identified though publicly available information.
- The absence of a corporate income tax or the presence of a zero corporate tax rate
Q: Based on this methodology which countries were listed by the EU as jurisdictions highly likely to facilitate tax avoidance?
A. 81 non-EU member states; representing almost half of the membership of the United Nations.
Here is the list:
Antigua and Barbuda
Bosnia and Herzegovina
British Virgin Islands
China, Hong Kong SAR
China, Macao SAR
China, Taiwan Republic of
Former Yugoslav Republic of Macedonia
Isle of Man
Korea, Republic o
Saint Kitts and Nevis
Saint Vincent and the Grenadines
Trinidad and Tobago
Turks and Caicos Islands
United Arab Emirates
US Virgin Islands