Question marks remain over whether the Island will pass ‘a real economic activity’ or ‘substance’ test, which assesses whether any actual business activities of offshore structures take place in the jurisdictions where they are based. Failure to pass could result in Jersey being blacklisted.
This week, European Commission vice-chairman Valdis Dombrovskis said that sanctions would need to be imposed on any blacklisted jurisdictions, if the list is to be considered ‘credible’. Sanctions could include fines and ‘administrative penalties’.
Jersey and Guernsey are among 92 jurisdictions which are being considered for inclusion on the blacklist, which is due to be published on 5 December.
A discussion of the blacklist was added to the agenda of an EU finance ministers’ meeting on Tuesday, in response to the media coverage of the Paradise Papers data leak, which exposed the offshore dealings of wealthy individuals and corporations.
Following the meeting, Mr Dombrovskis said: ‘Today we also discussed the EU blacklist for non-cooperative tax jurisdictions. The work on the list is on-going as planned.
‘We call for an agreement on the list at the 5 December [EU finance ministers’ meeting], but we also call for an agreement on countermeasures against those jurisdictions that will end up on the list. Only then will this exercise be credible and meaningful.’
He also said that he hoped the Paradise Papers would create ‘political momentum’ in the EU to tackle tax avoidance and evasion.
A spokesman for the External Relations Department said that it would be ‘irresponsible’ to speculate on the likelihood of Jersey being added to the blacklist.
But, he added: ‘We are confident of being able to meet the majority of the criteria being used by the EU for this assessment, given our strong track record of co-operation and our commitment to meeting international standards.
‘Those criteria concern tax transparency; the absence of preferential tax regimes; and a commitment to the OECD actions for tackling base erosion and profit shifting.
‘However, one of the criteria (2.2) will require further consideration, because of the opportunity it gives to interpret what is meant by the requirement that offshore structures in the jurisdictions being screened have “real economic activity” or “substance”. This is not helped by the fact that currently there is no international standard on these matters.’
He added that Jersey has ‘co-operated fully with the screening process’ for the blacklist and added that Chief Minister Ian Gorst went to Brussels last week to raise Jersey’s interests.
It is understood that EU member states are divided on their enthusiasm for the blacklist, with countries where international finance centres operate, like the UK, Luxembourg and Malta, more sceptical.
French finance minister Bruno Le Maire, however, has called for international funding to be cut to countries added to the list.
Meanwhile, the journalist organisation behind the Paradise Papers reports has indicated that it will not share with governments the documents which led to Jersey law firm Appleby being accused of helping a US tech giant avoid tax on billions.
The International Consortium of Investigative Journalists yesterday tweeted a link to an FAQs section on its webpage, which says: ‘The long-standing policy of ICIJ is not to turn over such material.
‘The ICIJ is not an arm of law enforcement and is not an agent of the government. We are an independent reporting organisation, served by and serving our members, the global investigative journalism community and the public.’
The statement comes after Jersey’s government and the financial regulator asked to see the documents relating to Appleby.
