The European Union is to add the Cayman Islands to a foreign tax havens blacklist, just two weeks after the UK’s withdrawal from the bloc.
The EU has enforced the blacklist in attempt to impose a clamp down on tax avoidance, the sum of which is an estimated £506 billion (€608 billion). However, member states are not ‘screened’ in the process of creating the blacklist.
Recently, the UK had heavily lobbied overseas territories linked to member states, which had avoided the blacklist, to protect it from scrutiny.
On Wednesday, it was reported that EU ambassadors judged that the Western Caribbean Sea islands are not cooperating with Brussels on financial transparency.
Currently, on the blacklist are; Fiji, Oman, Trinidad and Tobago, Samoa, Guam, Vanuata and the three US territories of American Samoa, and the US Virgin Islands, on the ‘non cooperative’ list.
Last year, the Tax Justice Network criticised, The UK, and its ‘tax haven network’, to be the world’s greatest enabler of corporate tax avoidance. This saw the Cayman Islands and the British Virgin Islands up for review since they were situated on the ‘grey list’ in 2018.
It has been believed by the EU’s member states that the Cayman Islands has failed to introduce the necessary legislation to address problems identified by Brussels.
The hurdles that blacklisted countries face is in accessing EU funds, and when other EU companies do business with the blacklisted, they must take additional compliance measures.
The blacklist was first compiled in 2017 to put pressure onto countries to crack down on unfair competition and tax havens. Since 2018, the blacklist has diminished from 15 to eight countries.
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