The Macao SAR Government has described a decision by the European Union (EU) to blacklist Macau as a tax avoidance haven as “unilateral and biased.”
The EU on Tuesday finalized its list of 17 nations it considers to be non-cooperative taxation jurisdictions based on three key factors, namely tax transparency, fair taxation and the implementation of anti-BEPS measures. Another 47 countries have been included on a gray list and must prove their commitment to undertake promises made.
Macau and the blacklisted nations could face sanctions although nothing specific has been recommended.
In a statement, the government denied suggestions it was a tax haven and said the EU’s decision “did not take into consideration the actual situation in the city.”
“Macau has closely engaged with the international community, including the EU and the Organization for Economic Co-operation and Development (OECD), on matters relating to the fight against cross-border tax evasion and promotion of a fairer taxation system worldwide,” it said.
“In addition, Macau is a member of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. Macau is also a member of the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which works to implement measures against such activities by all sorts of entities.
“Macau’s membership of these initiatives – approved after OECD evaluation – confirmed the city’s taxation transparency and its efforts regarding exchange of tax information, and confirmed the fact Macau was working to comply with the latest international standards.
“Macau also actively took part in the OECD’s global cooperation initiatives and had joined hands with participating jurisdictions in pushing forward tax reforms and fighting against tax evasion.”
The government pointed to the fact that the Law on Exchange of Information on Tax Matters was passed in the Legislative Assembly in May, adding that the first automatic exchange of tax information is scheduled to be carried out in 2018.
The government was working diligently on the adoption in Macau of the OECD’s Convention on Mutual Administrative Assistance in Tax Matters and on the optimization of local regulations regarding offshore activities, it said.
The EU first began work on a strategy document to combat “harmful tax competition” in January 2016, stating at the time that it was working “towards the goal of a common EU system for assessing, screening and listing third countries . . . with a clear and coherent EU approach to identifying third countries that fail to comply with good governance standards.”
The other nations on the EU blacklist are South Korea, Panama, Bahrain, Tunisia and the United Arab Emirates, as well as Barbados, Samoa, American Samoa, Grenada, Guam, Macau, the Marshall Islands, Mongolia, Namibia, Palau, St Lucia and Trinidad and Tobago.