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European scorecard developed to identify non-cooperative tax jurisdictions

The European Commission is developing a scorecard of 'indicators' to help it create a list of countries that "do not play by the rules when it comes to taxation", it said. 19 Sep 2016

The scorecard will help member states to identify which countries should be screened more fully, the Commission said.

All non-EU countries and tax jurisdictions have been analysed to determine their risk of facilitating tax avoidance, based on information including economic data, financial activity, institutional and legal structures and basic tax good governance standards, the Commission said.

The scoreboard gives factual information on every country under three neutral indicators: economic ties to the EU, financial activity, and stability factors. 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 judgment 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," the Commission said.

The scoreboard is part of a three-step process to develop a common EU list, the Commission said. It will be followed by screening, where the member states use the scorecard to decide which countries should be formally screened and the Commission discusses tax matters with these countries. Once screening is complete, any countries that refuse to cooperate or engage will be put on the EU list.

The final list will "carry 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 Commission said.

The Commission hopes to produce a definitive list by the end of 2017, it said.

Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs said: "The EU takes its international tax good governance commitments seriously. It is reasonable for us to expect the same from our international partners. We want to have fair and open discussions with our partners on tax issues that concern us all in the global community. The EU list will be our tool to deal with third countries that refuse to play fair."

The EU reached agreement last year on the automatic exchange of tax information. From 1 January 2017, member states will exchange information automatically on advance cross-border tax rulings and pricing arrangements. This will remove the current discretion given to member states on what information they share, when and with whom.