On the 14th of February, the EU issued a press release updating its blacklist regarding non-cooperative countries adding the British Virgin Islands, Costa Rica, Marshall Islands and Russia to its list of non-cooperative jurisdictions for tax purposes.
After this update the list includes the following 16 countries:
- American Samoa
- Anguilla
- Bahamas
- British Virgin Islands
- Costa Rica
- Fiji
- Guam
- Marshall Islands
- Palau
- Panama
- Russia
- Samoa
- Trinidad and Tobago
- Turks and Caicos Islands
- US Virgin Islands
- Vanuatu
This revised EU list of non-cooperative tax jurisdictions includes countries that either has not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms.
The reforms aim to comply with a set of objective tax good governance criteria, which include tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting.
Details for the Marshall Islands
There are concerns about this jurisdiction which has a zero or only nominal rate of corporate income tax and is attracting profits without real economic activity. The Marshall Islands were found to be lacking in the enforcement of economic substance requirements. The Marshall Islands have been listed already once back in 2018.
British Virgin Island
This jurisdiction was found not to be sufficiently in compliance with the OECD standard on exchange of information on request. This is the first time this jurisdiction is listed.
Costa Rica
Costa Rica is included because it has not fulfilled its commitment to abolish or amend the harmful aspects of its foreign source income exemption regime.
Russia
Russia is listed after the code of conduct group screened Russia’s new legislation adopted in 2022 against the good tax governance criteria of the code and found that Russia had not fulfilled its commitment to address the harmful aspects of a special regime for international holding companies. In addition, dialogue with Russia on matters related to taxation came to a standstill following the Russian aggression against Ukraine.
Impact
After this update, any dividend, interest and royalty payments to those jurisdictions will be subject to 17%, 30% and 10% in Cyprus withholding taxes.
Companies and individuals having business relations with the above-listed countries are strongly advised to contact our Audit department for further guidance.