Criteria for the EU offshore blacklist

The EU has been working on establishing criteria and compiling an offshore blacklist. One of the conclusions suggest that a zero income tax rate shall not constitute grounds for being blacklisted. This is good news for Singapore and Hong Kong, where the territorial taxation system implies that the income gained outside the country is not subject to taxation. This is also essential for the United Arab Emirates with their zero tax rates applied for companies and private entities.

The main factor of being blacklisted is the failure to comply with the following requirements:

  1. Adherence to the automatic exchange of information standard.
  2. Compliance with the OECD taxation standards.
  3. Active participation in the implementation of OECD projects on Mutual Administrative Assistance (MCMAA), the automatic exchange of information or other similar measures.

The compromise reached by the EU assumes that in order to not be blacklisted, the countries are required to fulfil at least two of the above regulations. This provision remains in force till July 30th, 2019. Eventually, all three criteria will become mandatory.