Bermuda was formally removed from the grey list by the Council of the European Union yesterday, as it added Anguilla, the Bahamas and Turks & Caicos Islands to the black list.

The council said in a statement: “The commitment of Bermuda with regard to the OECD FHTP [Organisation for Economic Co-operation and Development’s Forum on Harmful Tax Practices] recommendations on the effective implementation of substance requirements was deemed fulfilled, resulting in the deletion of the reference to this jurisdiction in the state-of-play document.”

David Burt, the Premier and Minister of Finance, said: “Bermuda prides itself on being a transparent jurisdiction and always compliant with EU standards. We committed to addressing the recommendation in Annex II and are pleased with this positive decision. As always, Bermuda remains committed to co-operating with the OECD FHTP and EU Code of Conduct Group (Business Taxation) in implementing tax governance standards.”

The Royal Gazette reported that Brmuds would be taken off the grey list last month.

The FHTP has been conducting reviews of preferential regimes since its creation in 1998 in order to determine if the regimes could be harmful to the tax base of other jurisdictions.

Also off the grey list is Tunisia, while Costa Rica remains. New additions are Armenia and Eswatini. The others on the list are Turkey, Barbados, Botswana, Dominica, Seychelles, Costa Rica, Hong Kong, Malaysia, Qatar, Uruguay, Jamaica, Jordan, North Macedonia, Russia, Belize, the British Virgin Islands, Israel, Montserrat, Thailand and Vietnam.

The three new blacklisted countries join American Samoa, Fiji, Guam, Palau, Panama, Samoa, Vanuatu, the US Virgin Islands, and Trinidad and Tobago.

The EU list of non-cooperative jurisdictions for tax purposes is part of the EU’s external strategy on taxation to promote tax good governance worldwide.

Jurisdictions are assessed on the basis of a set of criteria laid down by the council. These criteria cover tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting.

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The list is updated twice a year and the next revision is scheduled for February.

The EU’s 27 finance ministers adopted the council conclusions today which update the EU list of non-cooperative jurisdictions (Annex I or the black list) and the so-called state-of-play document (Annex II or the grey list).

The blacklist includes countries that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms.

Those reforms should aim to comply with a set of objective tax good governance criteria, which include tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting.

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The EU said the reason for the inclusion of Anguilla, the Bahamas and Turks and Caicos Islands in the list is that there are concerns that these three jurisdictions, which all have a zero or nominal only rate of corporate income tax, are attracting profits without real economic activity (criterion 2.2 of the EU list).

In particular, they failed to adequately address a number of recommendations of the OECD Forum on Harmful Tax Practices in connection to the enforcement of economic substance requirements, something to which they committed earlier this year.

The Code of Conduct Group, which prepares the updates of the list, is co-operating closely with international bodies such as the FHTP to promote tax good governance worldwide.

In addition to the list of non-cooperative tax jurisdictions, the council said it approved the usual state of play document (Annex II) (grey list) which reflects the ongoing EU co-operation with its international partners and the commitments of these countries to reform their legislation to adhere to agreed tax good governance standards.

Its purpose is to recognise ongoing constructive work in the field of taxation, and to encourage the positive approach taken by co-operative jurisdictions to implement tax good governance principles.