European Union governments adopted a broadened blacklist of tax havens, adding the United Arab Emirates and British and Dutch overseas territories in a revamp that tripled the number of listed jurisdictions.
The 28-nation EU set up the blacklist in December 2017 after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills.
Seven countries are to be moved back from a grey list because reform commitments had not been met. These are Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica, an EU statement said.
They are joined by three other countries whose tax policies have grown more aggressive in the past months. They are Barbados, the United Arab Emirates and the Marshall Islands.
Italy long resisted the addition of the UAE. The Middle East powerhouse has recently made significant investments in the economically troubled European country.
Rome had wanted to keep the Emirates on the so-called grey list of countries that have made pledges to get their tax laws in order with a standard set by Brussels.
“Everything will be solved” when new legislation in passed in the UAE, Italian Finance Minister Giovanni Tria said. “The Emirates will come out immediately afterwards.”
Britain, just weeks before its planned divorce from the EU on March 29, resisted the addition of its overseas territory Bermuda but relented last week.
Five countries remain blacklisted because they did nothing to justify moving them off the original list of tax havens: American Samoa, Guam, Samoa, Trinidad and Tobago, and the US Virgin Islands
The UAE said it regrets the EU’s decision and that it has shared with the bloc a detailed plan of the action it is currently implementing, state news agency WAM reported.
“This inclusion was made despite the UAE’s close cooperation with the EU on this issue and ongoing efforts to fulfil all the EU’s requirements,” WAM said.
“The UAE remains firmly committed to its long-standing policy of meeting the highest international standards on taxation, including the OECD’s requirements, and will continue to update its domestic legislative framework in this regard.”
EU tax commissioner Pierre Moscovici said the listing process was a great success because it had pushed dozens of countries to abolish “harmful tax regimes”.
Decisions on tax matters require the backing of all 28 EU member states.
Pressure from the United States, Saudi Arabia and Panama prompted EU governments last week to block another blacklist of countries that show deficiencies in countering money laundering and terrorism financing.
EU documents seen by Reuters show that Italy and Estonia objected to the new tax haven list, as they opposed the inclusion of the United Arab Emirates.
The EU blacklist originally comprised 17 jurisdictions, including the UAE, but it shrank to five after most listed states committed to change their tax rules.
Last month, the EU’s governing body, the European Commission, added Saudi Arabia to a list of countries seen as havens for money laundering and the financing of terrorism.
Riyadh’s addition to the list comes with growing concerns in the EU of the risk that Saudi Arabia poses in relation to terrorist financing, according to internal documents seen by Bloomberg.
Countries are listed if they have “strategic deficiencies in their anti-money laundering and countering the financing of terrorism regimes”, according to the commission’s working document.