Title: Palau Remains on EU’s List of Tax Havens Amidst Recent Tax System Overhaul

Island Times Investigates

Despite recently overhauling its tax system, Palau remains on the European Union (EU) list of suspected tax havens. The Micronesian nation had hoped that the new legislation would help remove it from the list, but the EU’s updated publication kept it under scrutiny.

Palau’s Inclusion on the EU’s List of Non-Cooperative Jurisdictions

• The EU’s list of non-cooperative jurisdictions is an annual publication intended to shame countries that do not meet European standards for tax transparency and information exchange.
• The updated EU blacklist, published October 1, 2021, indicates that Palau will remain under scrutiny.

New Palauan Legislation and EU’s Tax Evasion Directives

• The Tax Information Exchange and Co-operation (Amendment) Act was introduced to bring Palau’s tax laws in line with international best practices.
• The act allows Palau to share tax information with other countries, facilitating transparency and cooperation.

President Surangel Whipps Jr.’s Reaction

• Palauan President Surangel Whipps Jr. was disappointed after the EU’s updated list was published, citing substantial efforts taken by his government for greater transparency and cooperation.

Concerns Raised by the EU

• The EU’s concerns appear to center around issues of transparency and tax information exchange.
• Palau is known for its business-friendly environment and low corporate tax rates, historically attracting foreign investors looking to minimize their tax liabilities.

Countries on the EU’s List of Non-Cooperative Jurisdictions

• Other countries on the EU’s 2021 list include Panama, Grenada, and Vanuatu.
• These nations have been given until the end of 2022 to address the EU’s concerns and avoid further penalties.

Implications for Palau

• Palau’s inclusion on the EU’s list comes as a blow to the country, which had aimed to shed its reputation as a tax haven and attract new investment and tourism.
• The situation raises questions about the EU’s criteria for determining which countries belong on the list and the fairness and transparency of the process.

Stay Tuned for Updates

• Island Times will continue to monitor developments and bring you updates on Palau’s efforts to remove itself from the EU’s list of tax havens.