EU to deny Covid-19 grants to companies with links to 12 nations and territories identified as tax havens
Guam, American Samoa and U.S. Virgin Islands have remained on the European Council’s updated list of blackballed jurisdictions, despite the U.S. Department of Treasury’s earlier bid to drop them from the roster of tax havens.
Companies with links to blacklisted jurisdictions will not have access to Covid-19 financial grants offered by European Union member states, according to a recommendation issued by the European Commission in July 2020.
The list, released by the council on Feb. 22, shrank to 12 from 23 in 2019.
Palau, which was cleared in 2018, is back on the list. Other blacklisted jurisdictions include Anguilla, Dominica, Fiji, Panama, Samoa, Seychelles, Trinidad and Tobago, and Vanuatu.
“Several EU countries have already introduced or proposed measures targeted at jurisdictions on the EU list, such as non-deductibility of costs for certain payments made to companies based in a listed jurisdiction , increased withholding tax rates on dividends paid to non-cooperative jurisdictions, and controlled foreign company rules among other measures,” the council said.
The blacklisted jurisdictions, according to the council, were determined to have failed in complying with all international tax standards but have not made sufficient commitments to reform their tax policies.
Jurisdictions are assessed on the basis of a set of criteria laid down by the Council in 2016. These criteria cover tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting. Work on the list is a dynamic process and it has been revised several times. As of 2020, it is being updated twice a year.
In 2019, the U.S. Department of Treasury challenged the EC’s list, saying it was developed from a “flawed process.”
The agency said the United States’ implementation of the Financial Action Task Force’s standards extended to all U.S. territories.