EU tax haven blacklist targets multiple LAC jurisdictions

Panama, Trinidad & Tobago and Barbados have all landed on the EU's blacklist of 17 non-cooperative tax jurisdictions, released Tuesday.

More nations from Latin America and the Caribbean (LAC) may be added, with eight hurricane-impacted countries given more time to take steps to signal cooperation on tax deficiencies.

"The EU list was always intended as a last resort option - when all other efforts to engage with a third country had failed. Jurisdictions that were prepared to cooperate were not listed, so long as they gave a clear and concrete commitment to address the identified tax deficiencies," according to a EU press release on the blacklist.

Jurisdictions added to the list now face a number of EU sanctions including the following:

• Only on-the-ground development and sustainability projects may receive EU funding (e.g. EFSD, EFSI, ELM). EU funds going to similar projects elsewhere may not be channeled through blacklist nations.
• Stricter reporting standards and additional monitoring mechanisms tied to other EU legislative proposals will go into effect.
• EU member states are encouraged to coordinate further sanctions at the national level.

The EU list adds to the unwelcome scrutiny on the Caribbean and Panama stemming from the release of last month's Paradise Papers and last year's Panama Papers.

Pictured: Oxfam activists stage a satirical street-play mimicking wealthy people on the beach of a tropical tax haven, on Dec. 5 near the European institutions in Brussels, where European Union ministers met to create a blacklist of non-EU tax havens. The EU has struggled for over a year to finalize the blacklist.

Panama has spent more than a year trying to escape from its reputation as a tax haven. Even as EU officials met to compile the final list, Panamanian officials were preparing draft legislation to criminalize tax evasion.

In June, OECD said Panama had a provisional "largely compliant" rating with regard to the level of implementation of some international tax transparency standards.

The Panamanian business executive association (APED) decried the EU announcement, describing the measures as "unjust and discriminatory" in a statement published in local daily La Estrella de Panamá.

"It is unacceptable for them not to have understood all of the efforts Panama has carried out with the creation of both laws and structures to be more transparent on fiscal matters," said APED.

The EU said eight jurisdictions (Antigua and Barbuda, Anguilla, Bahamas, British Virgin Islands, Dominica, St. Kitts and Nevis, Turks and Caicos, US Virgin Islands) that were badly hit by the hurricanes this year have been given until early 2018 to respond to the EU's concerns.

Furthermore, a number also fell into a 'grey list' of nations that were warned they may be added to the blacklist if key issues are not promptly addressed.

The following breakdown shows what LAC nations fell into this grey list by required action:

• Improve transparency standards: Curaçao, Jamaica, Peru
• Improve fair taxation: Aruba, Curaçao, Uruguay
• Introduce substance requirements: Bermuda, Cayman Islands
• Commit to apply OECD Base Erosion Profit Sharing (BEPS) measures: Aruba, Saint Vincent & Grenadines