Russia added to non-cooperative tax jurisdictions list

The European Union on Tuesday announced that it had added the British Virgin Islands, Costa Rica, Marshall Islands and Russia to its list of non-cooperative jurisdictions for tax purposes.

This development naturally also has an impact on financial service providers in Cyprus dealing with clients operating in those jurisdictions.

The European Council said that it regrets that these jurisdictions are non-cooperative on tax matters and invited them to improve their legal framework in order to resolve the identified issues.

“Today, we decided to add four jurisdictions to the EU list of non-cooperative jurisdictions for tax purposes: British Virgin Islands, Costa Rica, Marshall Islands and Russia. We ask all listed countries to improve their legal framework and to work towards compliance with international standards in taxation,” Swedish Finance Minister Elisabeth Svantesson said.

“At the same time, I warmly congratulate North Macedonia, Barbados, Jamaica and Uruguay as they successfully fulfilled their commitments and could be removed from the state of play document,” she added.

The council explained that this revised list of non-cooperative tax jurisdictions 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,” the council stated.

Regarding Russia, the council noted that Russia was added to the list after the EU’s code of conduct group screened Russia’s new legislation adopted in 2022 against the good tax governance criteria of the code and found that Russia “had not fulfilled its commitment to address the harmful aspects of a special regime for international holding companies”.

Finally, the council explained that “dialogue with Russia on matters related to taxation came to a standstill following the Russian aggression against Ukraine”.