As time goes on, and an issue persists, there comes a time where there is only so much that someone, or, in this case, a group of countries, can take. This is especially true when the issue that is happening is holding the country back. In this instance, the issue at hand was that of tax avoidance. In this case, said tax avoidance goes much further than simply failing to pay the taxes that is required of an individual. What the EU was fed up with most was how some of those that call European Union Member States home were using other countries, normally in the Caribbean, as “tax havens” in order to avoid taxes and keep their financials hidden. In order to attempt to put an end to these tax havens, or to at least limit them as much as possible, the European Union put the efforts into motion in the late 1990s. Specifically, in 1998, the European Council set up the Code of Conduct Group. Although the original plan for the group was focused around preferential tax regimes in Member States, it set everything in motion to tackle tax havens. Ten years later, in 2008, ECOFIN agreed that EU Member States would investigate helping third states with their taxes and issues related to taxes. These third states did not want this help originally. Because of this, four years later in 2012, the EU changed their original plan. To help from afar, if you will, the Commission published recommendations to encourage third states to set up minimum standards of good governance in tax related matters. These same recommendations featured the EU stating that Member States should publish blacklists that feature countries that do not set up these minimum standards related to taxes based on transparency, exchange of information, and avoiding harmful tax practices. If a Member State blacklists another country, it is possible that the Member State could renegotiate, suspend, or terminate double taxation conventions with the state that is blacklisted. Four years later, in 2016, ECOFIN agreed on the three criteria against which jurisdictions are to be assessed for the purpose of blacklisting, transparency, fair taxation, and commitment to implement OECD agreed minimum anti-BEPS standards. The next year, in late 2017, the first blacklist was agreed to by the Council. This was the start of change and moving forward. Greylists were also released which featured countries that were not as bad as those blacklisted, but still needed to make some necessary changes or help. The blacklist effort did not stop here, as the Council agreed that each EU Member State should apply at least one defensive measure to blacklisted states. That was the minimum, as there were additional measures that the Member States may do. In this case, should and may are much different. It is apparent that the blacklisting strategy did its job, as over a short period of time, the number of blacklisted states and territories dropped immensely. Without this well thought out and patient response by Europe and the European Union, it is very possible that the issue of tax havens would still be significant. However, it appears that the Europe and the EU are doing their best to keep tax avoidance at bay.
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