The European Commission is forging ahead with work to draw up a first common EU list of non-cooperative tax jurisdictions by presenting a pre-assessment of all third countries according to key indicators.
EU member states must now choose which countries should be screened more fully over the next months, to pinpoint countries that do not play by the rules on taxation.
In January 2016, the Commission launched a three-step process for establishing the common EU list as part of its broader agenda to curb tax evasion and avoidance.
A common EU list of non-cooperative jurisdictions will carry much more weight than the current patchwork of national lists when dealing with non-EU countries that refuse to comply with international tax good governance standards. An EU list will also prevent aggressive tax planners from abusing mismatches between the different national systems.
The aim is to publish the definitive list of non-cooperative jurisdictions by the end of 2017.
How the scoreboard was devised
The aim of the scoreboard is to help member states determine which countries the EU should approach regarding good governance on tax, and which countries they should begin screening.
All non-EU countries and tax jurisdictions in the world were analysed to determine their risk of facilitating tax avoidance. This pre-assessment was based on a wide range of neutral and objective indicators, including economic data, financial activity, institutional and legal structures and basic tax good governance standards.
As a first step, the scoreboard presents factual information on every country under three neutral indicators:
• Economic ties to the EU
• Financial activity
• Stability factors.
The jurisdictions that feature strongly in these three categories are then set against risk indicators, such as their level of transparency or potential use of preferential tax regimes.
The pre-assessment does not represent any judgement of third countries, nor is it a preliminary EU list. Countries can feature high in the scoreboard's indicators for a number of reasons, even when they pose no threat to member states' tax bases.
The intention is to help member states to narrow down their focus when deciding which countries to screen in more detail from a tax good governance perspective, which is the next step in the EU listing process.
The EU will work closely with the OECD during the listing process, and will take into account the OECD's assessment of jurisdictions' transparency standards.