Last February 24th, just one day after Russia’s invasion to Ukraine, and as if there weren’t more important things to deal with, the European Union (“EU”) updated its list of non-cooperating jurisdictions relative to taxes and added to the list two of the most serious jurisdictions with nil or low taxation in the Caribbean, namely: Bermuda and the British Virgin Islands (“BVI”).
Notwithstanding the fact that these lists are solely politically and have no practical consequences even for the Union’s countries, we could not omit referring to this new issue.
The case of the BVI is a jurisdiction assessed by OECD since 2019 for implementing its minimum standard of BEPS reports, by country, with two recommendations towards improvement. Even when the steps leading to implement both recommendations are on the way of being concluded prior to the deadline set for the fall of 2023 –because the meeting of the EU Council took place prior to that date- the inclusion of BVI was both logical and expectable. In fact, there was no way that they could not include it. It was equally expectable as it is now expected that both jurisdictions will now be eliminated from the list again (since the same thing happened before in 2020) during the Council’s meeting to take place by mid-2023 or in 2024
The inclusion of Bermuda and the BVI on the list just means that the EU will be doing an up-close monitoring of their progress in implementing recommendations within the period required. After a jurisdiction becomes compliant with all its obligations, it is removed from the annex. The two jurisdictions referred are committed to their international obligations and they have both completed the steps required for guaranteeing the successful implementation of the recommendations issued. As a matter of fact, the two of them had been deleted from Annex II in 2020, following the successful implementation of their economic substance systems.