To combat tax avoidance around the globe, and particularly in the Caribbean region, the European Union (EU) had to get creative. The biggest issue that the EU saw in relation to tax avoidance was the usage of certain countries as tax havens. Tax havens, which have been used for decades, are countries that feature very low tax rates, if any. As can be said about any nagging issue, people, and countries, can only deal with so much. Originally, ECOFIN agreed that EU Member States would seek to help third states with issues related to tax and tax law. This was going to be carried out through bilateral agreements. Although this was a good idea, third states did not want this to happen, as they feared the loss of tax sovereignty. This forced the Commission to change their approach, leading to the idea of recommending measures that encouraged third states and countries to apply minimum standards of good governance in tax matters. Along with that, the idea of blacklisting countries appeared. If a third state or country does not want to implement certain minimum standards for tax laws, EU Member States can blacklist them. If a Member State decided to blacklist a country, the Commission recommends first talking to these countries, then offers different options for the blacklistin process. These few different options include renegotiating, suspending, or possibly terminating double taxation conventions with the blacklisted states. This blacklist movement began in 2012 but did not take full action until a few years later, in 2016. It was in that year that ECOFIN agreed to the criteria against which jurisdictions are to be assessed for the purposes of blacklisting. These criteria come from three different categories: transparency, fair taxation practices, and the commitment to implementation of the OECD agreed minimum standards. The only thing missing at this point was the first blacklist. In late 2017, the Council put the cap on the idea of blacklisting countries when they finally released their initial blacklist. This blacklist featured 17 different states and territories, with 4 of those being in the Caribbean area. This blacklist was accompanied by a greylist, which featured an additional 47 states and territories that were doing better than those that were blacklisted. Now that the initial list was out, there were additional measures that needed to be taken by the Member States. The Council agreed that there should be defensive measures put in place by the Member States, which could come from a “should apply” list or from a “may apply” list. The idea of blacklisting, which could be seen as a bad idea at first, did its job, and very quickly. From December to May, the initial blacklist was slashed by over half. The greylist, however, grew by nearly 50%. At the end of the day, however, a state or territory would much rather be on the greylist than the blacklist. Even though the idea of blacklisting countries received backlash, it did its job.
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