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16.08.2017 02.00 Age: 2 days

Europe's blacklist of 'uncooperative' jurisdictions nears completion

A European Commission committee is discussing the sanctions that EU Member States will apply to its forthcoming blacklist of jurisdictions used by multinational companies for tax avoidance.

The blacklisting mechanism was announced, in January 2016, as part of a draft anti-avoidance directive. It is aimed at countries that the Commission does not consider to be 'playing fair' by its definition of tax good governance standards - typically, countries that have weak tax transparency, offer a preferential corporation tax regime to foreign companies, or charge a zero rate of corporation tax. Latin American countries on the original list include Brazil, Chile, Costa Rica, Colombia, Panama, Peru and Uruguay.

The Commission's Tax Code of Conduct Committee has been charged with producing a provisional list by September 2017. This will not be published and no information will be provided until the final list is approved by Member States. Those on the list may be subject to EU economic sanctions by the end of 2017.

The committee is doing its work in close secrecy, but the nature of these sanctions is now the focus of its discussions, according to documents shown to the business news service Bloomberg.

These suggest that each Member State will have a choice of several measures to apply, including withholding taxes on payments made to or from the blacklisted jurisdictions; tighter controlled foreign company rules; limits on tax-deductible business expenses; and restrictions on the participation exemption.


Europe's blacklist of 'uncooperative' jurisdictions nears completion