TURKEY: Country risks joining EU tax blacklist in May.

As published on cyprus-mail.com, Saturday 20 February, 2021.

Turkey risks being added to the 12 nations on the EU tax blacklist in May if it does not reform its practice.

The latest ruling by the Council of European Ministers of Economy and Finance (ECOFIN) comes at the end of a year in which Turkey was expected to make the necessary reforms. It is also over a month after the grace period ended on December 31.

The “Non-EU list of non-cooperative jurisdictions” comprises countries that encourage abusive tax practices. In the case of Turkey, the main issue is that of exchange of information, meaning that tax information on citizens and on corporates is not made available to other countries.

The OECD sets standards on tax transparency and information sharing which Turkey reportedly is not meeting. The establishment of a new single, common global standard on automatic exchange of financial account information in 2014 aimed at ending bank secrecy once and for all.

The listing on the blacklist was supposed to happen on February 16; it was scheduled at the ECOFIN meeting. However, the topic was dropped from the agenda at the last minute.

Turkey had reportedly improved its exchange of information practice to some extent, according to diplomatic reports. But the changes were not sufficient to alleviate the threat of joining the list altogether. Following Tuesday’s meeting, Portuguese Minister of State and Finance João Leão, whose country holds the rotating presidency of the Council of the EU, confirmed that progress had been made.

EU member states have held talks in recent days to update the bloc’s list of tax uncooperative countries. During these talks, the Cayman Islands was removed from the list, a change that triggered much controversy. Barbados was also removed.

Turkey, however, will remain on the “grey list” of countries due to adopt a tax reform package by meeting the deadline in May. Ankara has reportedly been asked to “engage more politically by the end of May.” The decision to place Turkey on the blacklist would have to be discussed among member states again, another member said.

The new deadline is a compromise in order to resolve differences among the 27 governments, as the EU and Turkey seek to ease tensions, which have recently been exacerbated by Turkish gas exploration operations in the eastern Mediterranean.

Some Member States, including France, Greece, Cyprus and Austria have opposed the granting of an extension, sources familiar with the matter have revealed. Nevertheless, Germany changed sides, seeking a delay for the listing, as Turkish cooperation on several thorny topics, including migration, saw progress.

The EU created the blacklist of non-cooperative countries in tax matters in 2017. The updated version will include 12 countries: Anguilla, American Samoa, Dominican Republic, Fiji, Guam, Palau, Panama, Samoa, the Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

Several nations, including Botswana, are pressuring the European Commission to remove them from its controversial “black” list of countries at risk for money laundering and terrorist financing.

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