Original source: Reuters

European Union (EU) finance ministers removed Namibia from the bloc’s blacklist of tax havens on Tuesday after it committed itself to changing its tax rules and practices, the EU said. The Economic and Financial Affairs Council established the list in December 2017, with the overall goal of improving tax good governance globally and ensuring that the EU’s international partners respect the same standards as EU member states do.

The move brought the list down to five non-co-operative jurisdictions – Samoa, Trinidad and Tobago, and the three US territories of American Samoa, Guam, and the US Virgin Islands.

Namibia was on the blacklist because its tax regulations and practices were not deemed to be in line with EU standards. But after the African country committed to changes, EU ministers moved it to a so-called grey list of countries with low tax transparency standards but which are aiming to improve, the EU said.

The EU blacklist was set up last December after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills. It originally included 17 jurisdictions.

Fair tax groups and EU lawmakers have criticised the rapid way the list has shrunk and say it also does not provide a complete picture of countries providing a jurisdiction for tax avoidance.

Blacklisted jurisdictions could face reputational damage and stricter controls on their financial transactions with the EU, although no sanctions have been agreed by member states yet.

Number of tax havens shrinking

The 17 jurisdictions on the original list are American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea (the republic), Macao SAR, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia, and United Arab Emirates.

On 23 January 2018, eight jurisdictions were removed from the list, following commitments made at a high political level to remedy EU concerns. Barbados, Grenada, the Republic of Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates are moved to a separate category of jurisdictions subject to close monitoring.

On 13 March 2018, the council removed Bahrain, the Marshall Islands and Saint Lucia from the list and added the Bahamas, Saint Kitts and Nevis and the US Virgin Islands, followed by the removal, on 25 May 2018, of the Bahamas and Saint Kitts and Nevis.

On 2 October 2018, the council removed Palau from the black list and found Liechtenstein and Peru compliant with all its commitments. In the latest development, on 6 November 2018, the council removed Namibia from the black list.