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05 December 2017

Ecofin has approved its first black list of tax havens: it contains 17 third countries, whose commitments remain unsatisfactory after 10 months of dialogue.

This was indicated by the French finance minister Bruno Le Maire. According to EU sources on the list there are 17 jurisdictions: these would be Tunisia, South Korea, United Arab Emirates, American Samoa, Bahrain, Barbados, Grenada, Guam, Macao, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago.

The French minister has indicated that another 47 third states are part of the so-called 'gray list': these are jurisdictions that do not comply with EU standards of transparency but that over the past few months and still in recent days have hastened to communicate commitments for don't take the reputational risk of being part of the 'black list'. The EU will verify whether the commitments made will be respected.

Thus, a long process that began at the beginning of the year when the EU has begun to pass X-ray 92 jurisdictions comes to an end. Until the last it was feared that the 'black list' would jump to allow jurisdictions under fire to make commitments and be part of the 'gray list' only. What is certain is that it is a "black list" that is considered credible. To give an idea, the OECD blacklist contains only one jurisdiction: Trinidad and Tobago.

It is not clear what will happen for what concerns the sanctions because the European ministers are divided. France, Belgium, Austria, Germany, Romania, Italy, Spain, Slovenia and Portugal (plus the European Commission) believe that the 'black list' can only be effective if there is a system of sanctions that works. Another block of countries, namely Luxembourg, United Kingdom (the Channel Islands on which much has been debated were not included in the black list at the end), Malta, Sweden, Ireland, Holland, Lithuania, Finland and Greece, hold back . The Luxembourg minister Piere Gramegna said: "It is already serious to be part of the black list".

Three criteria are at the base of the selection
The first is fiscal transparency: it is a matter of seeing if a jurisdiction practices the automatic exchange of tax information.
The second is tax equality: it has been verified whether a State applies or not preferential tax measures that involve damage.
Third criterion: compliance with the OECD measures to counter aggressive tax optimization. In the initial phase there was a big clash at Ecofin on a fourth criterion: the existence or not of a zero rate on companies. Following the resistance of some countries, United Kingdom in the lead, this criterion has been downgraded to a simple indicator for assessing the position of jurisdictions.