Island keeps itself off EU tax blacklist

An update of non-cooperative jurisdictions was published after a meeting with European finance ministers yesterday.

Guernsey’s absence from the list means it has addressed general concerns raised by the EU in 2017 in relation to legal economic substance requirements – essentially that business based here could show that they had type of presence that would justify the profits they were making.

It had to make changes by the end of last year.

Guernsey Finance chief executive Dominic Wheatley said the positive confirmation was to be expected.

‘Our diversity, breadth and depth of expertise naturally creates a competitive global finance centre, based on the substance of the advice and services we deliver.

‘This is a real endorsement of Guernsey as a co-operative jurisdiction and further indication of our ongoing commitment to meeting international standards.

‘In meeting those standards we are able to provide the certainty, stability and competitiveness that our clients demand.’

ECOFIN’s decision follows a further commitment made by Guernsey in December to work with the EU on sharing beneficial ownership information.

The economic substance changes were assessed by the EU’s Code of Conduct Group in January.

The Code Group recommended that it be recognised that Guernsey has met its commitments to implement tax good governance principles.

This was agreed by ECOFIN.

Policy & Resource president Deputy Gavin St Pier said Guernsey consistently maintained that it was a jurisdiction of substance.

‘We have worked closely with the EU, Jersey and the Isle of Man to demonstrate the existence of robust legal substance,’ he said.

‘I hope that it is now clear to EU Member States that they can have confidence in the work of the Code Group and consequently there is no further role for national blacklists, the basis of which are often arbitrary and prepared without any dialogue.’

The Netherlands put Guernsey on a tax blacklist because of its general zero rate of corporation tax.

Deputy St Pier said that Guernsey remains committed to ongoing co-operation and dialogue with the EU institutions and is ready to help other jurisdictions develop and implement substance requirements.

As part of this work, the States has committed to implement mandatory disclosure rules during 2019.

It has also built on its commitment to develop a new international standard for the exchange of beneficial ownership information by committing to working with the EU, so that corporate beneficial ownership information can be more readily shared on a reciprocal basis.

Deputy St Pier added that Guernsey will continue to monitor, and, as necessary, evolve its domestic regime in response to international developments.

In addition to the five jurisdictions that were currently blacklisted, the revised EU list of non-cooperative jurisdictions now also includes another 10: Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates, Vanuatu.

They did not implement the commitments they had made to the EU by the agreed deadline.

‘Today we completed our first comprehensive revision of the EU list of non-cooperative jurisdictions,’ said Eugen Teodorovici, minister for finance of Romania.

‘Since it was first adopted in late 2017, the list has proven its worth in promoting forward in a cooperative manner the EU’s agenda of improving global tax practices, fighting tax avoidance and improving good governance and transparency: more than 30 jurisdictions have already delivered on their commitment to pass tax reforms.’