14 Feb 2020
The European Union will add the Cayman Islands to a blacklist of foreign tax havens after the UK overseas territory failed to pass legislation that adequately addressed concerns about businesses seeking tax advantages in the jurisdiction, the Financial Times reported.
EU27 ambassadors voted on Wednesday to include the Cayman Islands on the list, marking the first time that the bloc has targeted a British overseas territory for its failure to prevent tax abuses, according to the FT, which cited unnamed diplomatic sources. The designation is expected to be confirmed by European finance ministers next week, less than a month after the UK’s exit from the EU, the newspaper reported.
An unnamed EU official who spoke with the the news outlet said that legislation passed by the Cayman Islands last year to address European concerns has been deemed “deficient” by the bloc. The territory has also failed to align its laws on investment funds with EU standards, according to the report.
The EU launched the tax haven blacklist in 2017 as part of a pressure campaign to crack down on tax evasion and avoidance. European companies that operate in blacklisted tax havens are expected to take enhanced compliance steps at additional cost, according to the report, which noted that the total number of jurisdictions included on the list has fallen from 15 in 2018 to eight as of this year.
The EU is separately expected to allow Turkey to remain on its “grey list” of jurisdictions with problematic tax laws rather than blacklist the nation over concerns tied to its data-sharing with EU member-states, the FT reported. The Bahamas and Armenia are also expected to be removed from the grey list.
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