Due to the fact that there is withholding of tax information in these jurisdictions, the European Union has published a ‘black list’ of offshore companies. The list contains states whose efforts in the field of combating money laundering and terrorism do not meet the standards of the European Union.
This list of jurisdictions that do not cooperate with the EU includes the following 17 countries: Palau, American Samoa, Bahrain, Mongolia, Namibia Barbados, Grenada, Guam, Macao, Marshall Islands, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia, South Korea, Panama and the United Arab Emirates.
There are also a number of countries on the ‘grey list’. These are states that fail to meet the European Union standards on financial transparency and the fight against super-beneficial tax regimes, but are going to make changes in their tax policy.
Among the countries included in the list of prohibited offshore companies, Panama (low prices for offshore services) and the UAE (free economic zones created for foreigners) are especially attractive for Russians.
The emergence of a blacklist will have an impact on those Russian companies that use offshore companies in the jurisdictions listed in order to optimise taxes. This list will abolish the possibility for transferring money through transit companies registered by Russian beneficiaries in the EU countries with a more favourable tax climate.
Still, it is not clear how the black list will operate. Experts suggest that this sanctions may include withholding tax at source with any transfers in favour of companies from blacklisted countries. Blacklisted countries may be deprived of access to financing from the EU countries, as well as enhanced transaction monitoring, increased audit risks for taxpayers, who use structures related to these jurisdictions, or have counterparties there. Restrictions may relate to the possibility of opening an account in EU banks or remitting funds to such jurisdictions. As a result, businesses will have to be moved to a more transparent system of business management, with tax payments at each stage it seems.