September 1, 2022
EU Council Reviews Tax Blacklist
On 24 February, the Council of the EU reviewed its List of Non-Cooperative Jurisdictions for Tax Purposes (“Blacklist”). No jurisdictions were added to the list during the review.
The following jurisdictions remain on the Blacklist: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu. The state of play in Annex II of the Blacklist also details steps taken by various jurisdictions to undertake reforms in order to comply with tax good governance standards. More detail on this can be found in the Code of Conduct (Business Taxation) report to the Council of the EU.
The Blacklist is reviewed twice per year, and will next be reviewed in October 2022.
Following on from the creation of an online database which compiles information on corporate income tax (CIT) incentives for investment, the OECD has now published a paper setting out the methodology employed for the development of the database and on initial data collected using the database from 36 developing countries.
According to the OECD, “the data reveal that tax exemptions are the most widely used CIT instrument across the 36 countries and identifies notable differences between the incentives used within and outside of Special Economic Zones (SEZs). In 80% of countries covered, at least one tax incentive supports an area related to the Sustainable Development Goals”.
On 15 March, EU Finance Ministers at the Council of the EU’s Economic and Financial Affairs Council meeting reached agreement on the Carbon Border Adjustment Mechanism (CBAM). The EU proposal aims to level the playing field by targeting imported goods from countries which do not apply the same standards as Europe, thus preventing carbon leakage. To do so, the Directive aims to put a price on carbon-intensive imports, such as steel, electricity and fertilisers, thus encouraging trade partners to implement similar green policies at home. As a result, global reduction of carbon emissions could be achieved simultaneously.
The Directive also foresees a registry of CBAM declarants (importers) centralised at EU level, as well as a minimum threshold which exempts importers from obligations where goods have a value of less than €150, in order to reduce administrative complexity.
Although agreement has been achieved on the wording of the CBAM, work on closely related aspects under the Emissions Trading Scheme Directive, such as the phasing-out of allowances to industry sectors and solutions for limiting carbon leakage must first be achieved. Once progress of these matters has been made at Council level, the file will thereafter be progressed to the European Parliament for negotiations.
On 22 March, the EU Parliament’s ECON and LIBE Committees held a joint public hearing concerning the new Anti-Money Laundering Package proposed by the EU Commission in July 2021. They highlighted the outstanding elements of the EU Commission’s legislative package from their perspectives. Interestingly, the Financial Action Task Force also updated its Recommendations to add new definitions of “nominator” and “nominee shareholder or director”, to strengthen the standards on beneficial ownership of legal persons, and recommended governments set up beneficial ownership registers where this is not already in place.
The Financial Action Task Force (FATF) updated its Recommendations to add new definitions of “nominator” and “nominee shareholder or director”, to strengthen the standards on beneficial ownership of legal persons, and recommended governments set up beneficial ownership registers where this is not already in place. These measures would reportedly be of use in identifying assets targeted by sanctions introduced by the international community following the Russian invasion of Ukraine.
Other changes to the FATF Recommendations include:
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