(Business Insider UK) - European Union finance ministers agreed on Tuesday to remove the Pacific island of Palau from an EU list of tax havens.
The island had been included on the blacklist in March as its tax rules and practices were deemed not in line with EU standards.
After it committed to changes, EU ministers agreed to move it from the blacklist to a so-called grey list of jurisdictions with low tax transparency standards but aiming to become less opaque, an EU document shows.
Six other jurisdictions remain on the blacklist. They are Namibia, Samoa, Trinidad and Tobago and the three U.S. territories of American Samoa, Guam and the U.S. Virgin Islands.
The EU blacklist was set up last December after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills. It originally included 17 jurisdictions.
Fair tax groups and EU lawmakers have criticized the rapid shrinking of the list and the fact that renowned tax avoidance countries are not listed.
Blacklisted jurisdictions could face reputational damage and stricter controls on their financial transactions with the EU, although no sanctions have been agreed by member states yet.
Those who are on the grey list could be moved to the blacklist if they do not honor their commitments.