The territory is beginning to feel the effects of Brexit as Members of the European Parliament (MEPs) recently voted to add British Overseas Territories such as the BVI, Guernsey, and Jersey to its tax havens blacklist.
Several jurisdictions have been taken on and off the list since it was first launched in 2017. However, in the past, the UK had lobbied to protect its Overseas Territories from scrutiny.
EU member states have also typically avoided inclusion from the list. However, in a press release published after the vote, the EU politicians said: “EU member states should also be screened to see if they display any characteristics of a tax haven, and those falling foul should be regarded as tax havens too”.
A majority of 537 members of the European parliament voted for the resolution which called on the EU to revise the blacklist.
The European politicians said the blacklist failed to “live up to its full potential” as it currently covers less than two percent of worldwide tax revenue losses.”
They also said the Cayman Islands, the Bahamas and Guernsey should not have been taken off the blacklist a few months ago.
They singled out the Cayman Islands questioning why it was removed when it has a zero percent tax rate policy.
They also called for countries that have no taxes on companies’ profits to be automatically added to the list.
“Criteria should be added to ensure that more countries are considered a tax haven and to prevent countries from being removed from the blacklist too hastily, they say.
In February 2020, the EU upgraded the British Virgin Islands to whitelist status, which signals the country as a fully cooperative tax jurisdiction that is observing all of the tax good-governance standards.
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