Blacklisted tax havens could face four types of sanctions

Aug 31, 2017 | FATCA, FBAR, Modelo 720 | 0 comments

The European Commission is understood to be looking at four kinds of sanctions targeted at jurisdictions on its planned tax haven blacklist which is due to be finalised at the end of this year.

The Commission’s Tax Code of Conduct Committee is scheduled to come up with a provisional blacklist behind closed doors by September 2017, with the 28 EC member states giving the final rubberstamp of approval before the list and potential menu of sanctions goes live.

The four kinds of sanctions under the spotlight, according to papers seen by Bloomberg, cover withholding taxes, new controlled foreign company rules, elimination of deductible costs such as royalties, and participation exemption limitations.

“Identifying specific countermeasures will not mean agreement on their implementation in all cases,” the document stated “There may be arguments for applying different countermeasures for different jurisdictions or in different contexts or that member states should be allowed flexibility on which measures they should apply.”

The document also stated that sanctions imposed by EU member countries should be “appropriate in the context of their national tax legislation. It has been suggested that the type of countermeasures to be applied vis-a-vis the various jurisdictions should differ according to the respective specifics of a situation (e.g. political and economic) and the issues that their assessment will raise.”

Flexible approach

The flexible approach would allow EU member countries to treat the list of sanctions as a menu from which to choose, it added: “This option allows a maximum flexibility but can perhaps be considered as complicated”. There are 92 countries under scrutiny by EU member state officials to determine the blacklist, based on tax transparency and corporate tax criteria. The countries include the US, Switzerland and a selection of Latin American countries such as Brazil, Chile, Costa Rica, Colombia, Panama, Peru and Uruguay.


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