On the 20th of February 2024, the EU list of non-cooperative tax jurisdictions was updated, reaffirming EU's dedication to fostering global tax transparency and fair taxation practices.
In this latest update, four jurisdictions – the Bahamas, Belize, Seychelles, and Turks and Caicos Islands – have undergone changes in their status such that they have been removed from the EU list of non-cooperative jurisdictions for tax purposes (Annex I), which now consists of a total of 12 countries:
- American Samoa
- Anguilla
- Antigua and Barbuda
- Fiji
- Guam
- Palau
- Panama
- The Russian Federation
- Samoa
- Trinidad and Tobago
- US Virgin Islands
- Vanuatu
Notably, the Bahamas and Turks and Caicos Islands have been fully delisted due to their successful efforts in addressing deficiencies related to the enforcement of economic substance requirements, whereas Belize and Seychelles have been moved to Annex II, pending the outcome of a supplementary review by the Global Forum on Tax Transparency and Exchange of Information.
Annex II now includes 10 jurisdictions that have committed to enhance their tax governance standards.
What are the potential implications of having a link with a non-cooperative jurisdiction?
- Maltese entities having a nexus with any of the jurisdictions included in the EU list of non-cooperative jurisdictions have the obligation to disclose information in relation to such nexus in TRA110 of the tax return;
- Maltese entities having a participating holding in an entity that is resident in a country which is included in the EU list of non-cooperative jurisdictions may be denied the application of the participation exemption on dividend income;
- In terms of DAC6, Hallmark C1, there could potentially be reporting obligations, whenever there are cross-border payments between associated enterprises, where the recipient is tax resident in a jurisdiction that is on the EU list of non-cooperative jurisdictions.