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What do these alterations signify, and how might they affect international businesses? This article will provide a comprehensive summary of the updated EU list and its potential impact on various stakeholders.
Overview of the EU’s tax jurisdiction list
The EU’s list, which is a response to the growing global tax avoidance issues, serves as a regulatory tool for the EU member states to use in monitoring and enacting stringent tax regimes.
Criteria for listing include transparency, fair taxation, and compliance with the OECD’s Base Erosion and Profit Shifting (BEPS) minimum standards.
The list includes:
- Annex I: List of non-cooperative jurisdictions for tax purposes.
- Annex II: The “grey list”, representing jurisdictions that do not yet comply with all international tax standards but have committed to implementing reforms.
Major changes to the EU’s list in Feb/2024
The February 2024 update brings significant changes to both Annex I and II.
Image source: European Commission
Four countries removed from Annex I
Four countries were removed from Annex I – List of non-cooperative jurisdictions for tax purposes.
This change reflects the countries’ efforts to adhere to the global standard for tax transparency and information exchange, leading to positive development.
Four removal countries include:
- Bahamas
- Belize
- Seychelles
- Turks and Caicos Islands
Following this update, the EU’s list of non-cooperative jurisdictions now comprises the following 12 jurisdictions:
- American Samoa
- Anguilla
- Antigua and Barbuda
- Fiji
- Guam
- Palau
- Panama
- Russian Federation
- Samoa
- Trinidad and Tobago
- US Virgin Islands
- Vanuatu
Changes in Annex II – the “grey list”
Updates to Annex II were implemented alongside revisions in Annex I by the EU Commission. This decision encompasses:
Removal of six countries
The countries that were removed from the grey list:
- Albania
- Aruba
- Botswana
- Dominica
- Israel; and
- Hong Kong SAR
These changes were made considering the countries’ efforts in implementing tax reforms and following up on commitments to comply with EU standards.
Addition of two countries
The Commission added two jurisdictions Belize and Seychelles, to the grey list. These additions are primarily due to concerns regarding their economic substance requirements.
The grey list now includes the following 10 jurisdictions:
- Armenia
- Belize
- British Virgin Islands
- Costa Rica
- Curaçao
- Eswatini
- Malaysia
- Seychelles
- Türkiye; and
- Vietnam
What does this mean for international businesses?
These changes significantly impact corporations and businesses in listed jurisdictions. For businesses in countries listed in Annex I and Annex II, this may lead to extra reporting tasks and additional tax measures like Economic Substance Rules in Belize or Seychelles. On the positive side, it could also result in more standardized, lower-risk operations for global enterprises.
Businesses need to ensure accurate annual compliance with tax reporting, payments, and local legal filings in any jurisdiction. Furthermore, businesses must stay updated on any changes to the EU’s list, as it may directly affect their operations.
If you have any inquiries or uncertainties about the revised EU list, feel free to contact us at service@bbcincorp.com for relevant information. We are delighted to help you with any assistance you may need!
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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