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May 21, 2019updated 22 May 2019 7:38am

European Union drops three offshore centres from tax haven blacklist

The European Union has dropped from its tax haven blacklist the Caribbean islands of Bermuda, Aruba and Barbados.

These three offshore centres were added to the black list from the ‘grey list’ in March this year as their tax rules were not in accordance with EU requirements.

EU in a statement said Barbados has been removed because it has agreed to remedy concerns regarding the replacement of its harmful preferential regimes, while Aruba and Bermuda have implemented their commitments.

The blacklist of tax havens was created by the European Union in December 2017 to crackdown on tax evasion.

The move followed the massive data leaks of the Panama Papers and Paradise Papers. The leak of 13.4 million files from offshore law firms and company registries in 19 tax havens worldwide revealed evidence of tax evasion.

However, the three Caribbean islands have been returned to the EU’s ‘grey list’ of non-cooperative jurisdictions for tax purposes.

The grey list was revised in March 2019 after a review of the implementation of the commitments taken by jurisdictions that are part of the process. Included on the list are a host of other Caribbean countries as well as other financial centres such as Switzerland and Mauritius.

There are no penalties associated with being on the grey list, however, the EU hopes to pressure governments to make the necessary reforms to remove the countries from both its list of tax havens.

After the latest review, the blacklist now comprises just 12 offshore centres. These are: Belize, Fiji, the Marshall Islands, Vanuatu, Dominica, Samoa, Trinidad and Tobago, the United Arab Emirates, Oman, Samoa, Guam, and the US Virgin Islands.

“The work on the EU list of non-cooperative jurisdictions is a dynamic process. The Council will continue to regularly review and update the list in 2019,” the statement by EU added.

Last week, German tax investigators raided 11 banks, six asset management companies and four tax consultancy firms in connection with eight wealthy individuals in suspected of tax evasion.

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