Reasons why Costa Rica has been included in the EU list of non-cooperative tax jurisdictions

The revised EU list of non-cooperative tax jurisdictions (Annex I) includes countries that have either not engaged in a constructive dialogue with the EU on tax good governance or have not fulfilled their obligations to implement the necessary reforms. These reforms should aim to meet a number of objective criteria for good governance in tax matters, including tax transparency, fair taxation and the implementation of international standards to prevent tax base erosion and profit shifting.

The Code of Conduct Group, the EU Council’s body that prepares the updates to the list, works closely with international bodies such as the FHTP to promote good governance in tax matters worldwide.

With regard to the Marshall Islands, there is a concern that this country is attracting profits with a corporate tax rate of zero or only a nominal tax rate, without any real economic activity (criterion 2.2 of the EU list). In particular, it was found that the Marshall Islands lacks the enforcement of the requirements of economic substance. The Marshall Islands have already been added to the list once, in 2018.

The British Virgin Islands are on the list because they do not sufficiently comply with the OECD standard for the exchange of information on request (criterion 1.2). This is the first time that this country has been included in the list.

Costa Rica is included for the first time in the history of the list for failing to comply with its obligation to eliminate or amend the harmful aspects of its foreign-sourced income exemption scheme (criterion 2.1).

Russia was added to the list after the Code of Conduct Group examined the new Russian legislation adopted in 2022 against the criteria of the Tax Good Governance Code and found that Russia had not fulfilled its obligation to eliminate the harmful aspects of a special regime for international holding companies (criterion 2.1). In addition, the dialogue with Russia on tax issues came to a standstill after the Russian aggression against Ukraine.

Read more here:

https://www.consilium.europa.eu/en/press/press-releases/2023/02/14/taxation-british-virgin-islands-costa-rica-marshall-islands-and-russia-added-to-eu-list-of-non-cooperative-jurisdictions-for-tax-purposes/