October 11, 2019

Andrew Campbell 

In 2015 the Panama Papers, the secret of dirty money, was exposed to the public. It talks about the Panamanian law firm Mossack Fonseca that sold  anonymous offshore companies to corporations and wealthy individuals with dozens of offices all over the world. These shell corporations were mainly used for their owners to cover up illegal business dealings in frauds, evading taxes and international sanctions.

The Progressive Alliance of Socialists and Democrats, a political group in the European Parliament, reported its study in January which estimated the amount of 825 billion euros of tax evasion lost in the EU each year. Accordingly, the 28 member states of the European Union (EU) set up in December 2017 jurisdictions of a blacklist and a gray list of tax havens. Countries on the tax haven lists are usually monitored by stricter rules on transactions with the EU.

On October 10 the EU finance ministers announced 7 countries, Albania, Costa Rica, the Indian Ocean island of Mauritius, the Marshall Islands, Serbia, Switzerland, and the United Arab Emirates (UAE), have delivered on their commitments to reform and comply with the EU tax good governance policy. The EU has decided to remove them from its blacklist of tax havens.

In particular, the UAE continues without corporate tax but has adopted an amendment regarding offshore structures since September. The new rules allow only companies with a real economic activity there to be incorporated in which the UAE government holds at least a 51% share of the capital.

Meanwhile, the blacklist has 9 remaining countries and territories, Belize, Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu, and the 3 US territories of American Samoa, Guam, and the US Virgin Islands. There are around 30 countries remained on jurisdictions of the gray list. The EU will further review their commitments to reform tax rules to be compliant with EU standards in 2020.

Photo:Webshot.