Bermuda has been removed from the European Union’s (EU) list of non-cooperative jurisdictions after implementing commitments to address concerns about its tax transparency.
The island nation and global reinsurance hub was added to the list alongside 14 other countries last month for failing to comply with good governance standards on tax within its deadline.
The move was met with surprise from Premier David Burt and the wider re/insurance industry, who argued that Bermuda had been compliant with EU standards.
Bermuda has now been placed on a ‘greylist’ consisting of jurisdictions that “have taken many positive steps to comply with the requirements under the EU listing process, but should complete this work by the end of 2019, to avoid being blacklisted next year.”
Law firm Appleby noted that the EU will still require Bermuda to undergo “further technical guidance” in relation to addressing economic substance concerns in the area of collective investment funds.
Barbados and Aruba were also removed from the blacklist for committing to replace their harmful preferential regimes and implementing their commitments, respectively.
Twelve jurisdictions currently remain on the non-cooperative list, including: American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, US Virgin Islands and Vanuatu.
The EU agreed to begin compiling its list of non-cooperative jurisdictions in December 2017 to prevent tax avoidance and promote good governance principles such as tax transparency, fair taxation or international standards against tax base erosion and profit shifting.
Jurisdictions on the list can potentially incur a set of countermeasures from EU member states, including increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions.
The EU stated that it will continue to regularly review and update its non-cooperative list in 2019, but will limit itself to two updates per year as of 2020 in order to make the process more stable.