By Pacific Island Times News Staff
Guam, American Samoa and the U.S. Virgin Islands are among the 11 jurisdictions remaining on the European Union’s list of tax havens.
“This list is part of the EU's work to fight tax evasion and avoidance and aims to create a stronger deterrent for countries that consistently refuse to play fair on tax matters,” the European Council said.
The updated blacklist, released by the council on Feb. 18, shrank to 11 from 23 in 2019.
Palau, which was cleared in 2018 but reinstated in 2020, has since been a mainstay on the roster. The list also includes Anguilla, Fiji, Samoa, Vanuatu, Panama, the Russian Federation and Trinidad & Tobago.
A tax haven refers to a place that offers foreign businesses and individuals minimal or no tax liability for their bank deposits.
The council said the blacklisted nations— labeled as “noncooperative jurisdictions”—have failed and refused to comply with “tax good governance criteria” for tax transparency and fair taxation, making them magnets for tax evaders and money launderers.
Guam, American Samoa and the U.S. Virgin Islands implement tax systems that mirror the U.S. Internal Revenue Code. They have been on the list since 2017 for allegedly not sharing data, failing to ratify the Mutual Administrative Assistance in Tax Matters and maintaining "harmful tax regimes."
In a statement issued in 2019, the U.S. Department of the Treasury challenged the EC’s list, saying it was developed from a “flawed process.”
“The Treasury Department was not provided any meaningful opportunity to discuss with the European Commission its basis for including the listed U.S. territories.”
The federal agency said its foreign account tax compliance standards extend to all U.S. territories.
In a 2022 report, the Washington think tank Congressional Research Service noted that the EU list has a narrow focus "as it does not include countries based on their corporate tax rate but largely on issues such as transparency."
Jane G. Gravelle, senior specialist in economic policy and author of the CRS report, pointed out that some critics have disputed the EU's list, which excludes European countries and "other jurisdictions with tax haven characteristics."
"These jurisdictions include major countries such as the United States, the UK, the Netherlands, Denmark, Hungary, Iceland, Israel, Portugal and Canada," Gravelle wrote.
"Attention has also been directed at a number of states in the United States including Delaware, Nevada, South Dakota and Wyoming,". Finally, there are a number of smaller countries or areas in countries, such as Campione d’Italia, an Italian town located within Switzerland, that have been characterized as tax havens."
Established in 2017, the EU list of non-cooperative third countries “has proven a true success in promoting fair taxation worldwide” by prompting several countries to take concrete measures to comply with good tax governance standards.
“With each update of the list, we see that this clear, transparent and fair process is delivering real change,” the council said.
“The overall goal of the EU list is to improve tax good governance globally, and to ensure that the EU's international partners respect the same standards as EU member states do,” the council said.
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