Palau agrees to tax reforms to get off EU black list

2 Oct 18

The European Union has removed the Pacific island of Palau from its list of tax havens after the country committed to making changes to its tax system.

The bloc’s finance ministers decided today to remove the country, which had been included on the black list as its tax rules and practices were not aligned with EU standards.

After Palau said it would implement reforms, the ministers agreed to shift it to the ‘grey list’ of jurisdictions, which have low transparency standards but are committed to change, Reuters said, referring to EU documents.

This leaves just six countries on the black list: Namibia, Samoa, Trinidad and Tobago, and the three US territories of American Samoa, Guam and the US Virgin Islands.

The ‘grey list’ includes 47 other countries that have committed to change their tax rules on tax transparency and cooperation.

The original list, published in December last year, included 17 countries classified as tax havens.

The list, which was judged on the countries’ tax transparency, fair taxation and anti-BEPS measures, followed revelations of tax avoidance schemes used by corporates and wealthy individuals to pay less tax.

Ahead of the black list’s publication, a number of NGOs warned that a lot of EU countries would classify as tax havens under the bloc’s rules – but they were not listed.

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