EU Adds Fiji to Tax Blacklist, Citing Lack of Transparency and Harmful Tax Regimes

The European Union (EU) has added Fiji to its list of non-cooperative tax jurisdictions, citing the country’s failure to meet three key criteria: transparency, fair tax competition, and commitment to OECD’s Base Erosion and Profit Shifting (BEPS) minimum standards.

Lack of Transparency and Harmful Tax Regimes

Fiji was previously listed on the EU’s greylist but was moved to the blacklist after not meeting the required standards in a timely manner. According to an assessment by the European Commission, Fiji has “harmful preferential tax regimes” that have not been abolished, which has led to concerns about money laundering and terrorist financing.

Commitment to Comply with EU Recommendations

The country has committed to comply with EU recommendations, but the move is seen as a significant setback for Fiji’s efforts to improve its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. The country has not featured on the Financial Action Task Force (FATF) blacklists in the past, but this latest development raises concerns about its ability to effectively combat financial crime.

EU’s Blacklist Criteria

The EU’s blacklist is based on an assessment of third countries’ performance against three criteria:

• Transparency: Fiji has struggled to meet this criterion, with a recent report by the Financial Intelligence Unit (FIU) estimating that $100 million is laundered annually in the country.
• Fair Tax Competition: Fiji’s tax regime has been criticized for being harmful and not meeting international standards.
• Commitment to BEPS Minimum Standards: Fiji has failed to commit to implementing OECD’s BEPS minimum standards, which aims to prevent base erosion and profit shifting.

Implications for Fiji’s Economy

Fiji’s inclusion on the EU’s blacklist is likely to have significant implications for the country’s economy, including potential restrictions on trade and investment. It also raises concerns about the country’s ability to attract foreign investment and maintain its economic stability in the long term.

Wake-Up Call for Fiji

The move is seen as a wake-up call for Fiji to take immediate action to address its AML/CFT weaknesses and implement effective measures to prevent money laundering and terrorist financing. The country must now work towards implementing reforms to meet international standards and avoid further sanctions.