According to news agency Reuters, the European Commission's Code of Conduct Group has agreed to remove eight countries from the 'uncooperative jurisdiction' list of tax havens it published in December, after they responded with offers to amend their information exchange practices.
The eight are Panama, South Korea, the UAE, Barbados, Grenada, Macao, Mongolia and Tunisia. Once the Commission's recommendation has been approved by the Council of Ministers, the jurisdictions will be moved to the so-called 'grey list' of countries that have made solid undertakings to comply with the Commission's tax transparency criteria by December 2018.
It is not clear what extra commitments the eight countries have made. For Panama, the fact that it signed the OECD Multilateral Competent Authority Agreement on 15 January may well have played a role, although it had already promised to so 18 months ago.
According to Reuters, which claims to have seen the relevant Commission documents, the Code Of Conduct Group also considered removing Bahrain from the blacklist, but ultimately decided against doing so.
The blacklist now contains only Trinidad and Tobago, Saint Lucia, Bahrain, Guam, the Marshall Islands, Namibia, Palau, Samoa, and American Samoa.
Jurisdictions on the 'grey list’, including some British Overseas Territories and Crown Dependencies, are currently in discussions with the Code of Conduct Group about how to be removed from it, and put on the white list.
The principal stumbling block is the uncertain meaning of the phrase 'real economic activity', which appears in the 'substance requirements' criterion for inclusion on the grey list. The Code of Conduct Group wants such jurisdictions to abolish tax regimes that 'facilitate offshore structures which attract profits without real economic activity', but it is not clear how this can be addressed by small international financial centres.