Guam, Pacific island states among the last 9 jurisdictions still on EU's tax haven blacklist
Guam, along with other U.S. territories and Pacific island states, remains on the European Union’s shrunken list of jurisdictions with tax systems described as vulnerable to tax fraud and dirty money.
The EU this week cleared Anguilla, Dominica and Seychelles, cutting the tax haven list down to nine, from 25 when it was first made in 2017 to clamp down on tax avoidance and tax evasion.
EU’s updated list, released Oct. 5, includes Guam, American Samoa, Palau, Fiji, Panama, Samoa, Trinidad and Tobago, U.S. Virgin Islands and Vanuatu. They were blacklisted as “non-cooperative.”
International financial health authorities this week reiterated calls for an end to financial secrecy in light of the Pandora Papers, which revealed how the world’s richest and most powerful people hide their wealth from tax collectors.
According to the EU, the list of non-cooperative jurisdictions is a tool to tackle tax fraud or evasion, illegal non-payment or underpayment of tax, tax avoidance—such as the use of legal means to minimize tax liability — and money laundering.
“By identifying these countries at EU level, member states can act together to put pressure for reform,” EU said in a statement earlier this year.
The list is updated twice a year.
“The aim is not to name and shame countries, but to encourage positive change in their tax legislation and practices, through cooperation," EU said.
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The three U.S. territories-- Guam, American Samoa and U.S. Virgin Islands-- have remained on the blacklist 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.
“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.
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.