A discussion is now underway by the European Commission’s Tax Code of Conduct Committee concerning the sanctions that the EU member countries will exercise to their upcoming blacklist of jurisdictions used by multinationals for tax avoidance.
Leaks from the discussion indicate that each Member State will have a choice of stronger managed foreign company regulations, withholding taxes, restrictions on the participation exemption and tax-deductible expenses.
Countries like Mauritius, that have influential financial centres, are expected to be on the blacklist. Moreover, UK dominions such as the Isle of Man, Jersey and Guernsey, are due to feature on the list as well.
Essentially, the 2017 screening system was established on a collection of indicators such as, financial activity factors, stability factors, and the durability of their economic connection to the EU.
The EU finance ministers are in agreement that for countries wanting to avoid being on the upcoming blacklist, they would have to comply with certain requirements. For instance, third countries would have to refrain from “preferential tax measures” and would have to adhere to global transparency standards. The states would also have to carry out an international plan against tax avoidance, which is prepared by the OECD, and rules assisting “offshore structures”.