EU seeks to sanction countries on tax haven blacklist

An EU commissioner has called for sanctions against countries on the bloc's blacklist of tax havens and for increased transparency in those jurisdictions on its so-called grey list.

Trinidad and Tobago and Saint Lucia are the only countries in the region that remain on the EU blacklist, which was published on 5 December 2017.

On January 23, the EU moved 17 jurisdictions from the blacklist to the grey list, among them Panama, Barbados and Grenada, after they pledged to increase tax transparency.

EU tax and financial affairs commissioner Pierre Moscovici (pictured) said that "transparency is the mother of all fights against fraud and tax evasion," news agency AFP reported.

Moscovici, who said an official proposal would be made within the coming weeks, called for European funds and state development banks to avoid using the "financial arteries of countries that are considered tax havens."

Investors – particularly multilateral organizations and government development agencies – consider financial transparency when assessing a country or project.

In September, Panama – working to polish its image in the wake of the Panama Papers scandal – is due to start automatically exchanging tax information with other jurisdictions under the OECD's Common Reporting Standard (CRS) mechanism.

International advocacy group Tax Justice Network (TJN) has said that, while the move is a step in the right direction, Panama can choose which nations it swaps tax information with.

EU blacklist countries are those deemed non-cooperative jurisdictions while grey list nations are those that have made commitments to boost transparency.

"In international trade and other intergovernmental dealings, countries will obviously judge their foreign counterparts on their readiness and ability to effectively implement initiatives such as CRS," Lyndsey Wheeler, managing director of financial and business compliance services firm TMF's Central America operations (pictured), told BNamericas recently.