European Union finance ministers meet to review tax haven blacklist

European Union finance ministers will meet today to revise the bloc’s tax haven lists.

The EU criteria is based upon tax transparency, fair tax competition and base erosion and profit shifting. The blacklist includes tax regimes that fail to comply with the EU’s fair corporate taxation framework. The greylist enlists tax regimes that encourage offshoring of structures generating profits without any genuine economic activity. Although the EU does not sanction the blacklisted countries, it imposes stricter financial transaction regulations on them.

Aruba will be removed from the blacklist, Barbados and Bermuda will move to the greylist and Argentina, Mexico and Russia will begin  screening later this year. The lists do not include any member country, though Ireland and Luxembourg are well known hubs for foreign investment despite being small countries with low economic activity.

Keeping tax revenues within borders is not an unsound policy, but EU’s differential treatment of its members and outsiders hints towards increasing protectionism. After Brexit and the US-China trade war, a stronger EU-first play could impact global trade patterns.

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