Following the recent Paradise Papers, the EU is now intensifying its efforts to secure more transparency and accountability from offshore financial jurisdictions, otherwise known as tax havens.
Many superyachts, the exact number is unknown, are owned through offshore trusts which are often distantly linked to the ultimate owner. While many of the trusts are not illegal and are in the main designed to be tax-efficient mechanisms to reduce payments, in some instances they are allegedly used for tax evasion.
In its efforts to gain more transparency about these offshore havens, the EU has this week issued two country lists – one black with 17 countries on it and one grey with 47 nations included.
The black-listed states are considered by the EU to have failed to meet international standards on tax transparency and tax rates, and have not provided sufficient commitment that they will change in the months leading up to the list's publication.
The 47 nations on the grey list have made promises to reform their tax structures, which involves them making changes to ensure companies are not using 0% corporate tax rates to avoid paying tax on profits.
The two lists are all part of the EU’s strategy to convince offshore jurisdictions with non-transparent tax regimes and structures, allegedly designed to shield companies' profits from tax, to reform their systems. In addition, a plan to introduce financial sanctions on its black-listed nations was not agreed.
The 17 blacklisted countries are:
- American Samoa
- South Korea
- The Marshall Islands
- St Lucia
- Trinidad & Tobago
- United Arab Emirates
Of these 17 countries, the main one linked with the superyacht market is the Marshall Islands.
The grey list includes a number of British Overseas Territories and Crown Dependencies such as Jersey, Guernsey, Bermuda and the Cayman Islands, all of which are strongly linked with the global superyacht market.
What impact these initiatives will have following the recent insights provided by the Paradise Papers will be closely assessed by superyacht broking houses, legal practices, financial, banking and insurance companies and other interested parties.