2017 December 5th: The much awaited announcement of the EU’s list of non-co-operative tax jurisdictions was made yesterday and the Cook Islands was not on the list. This announcement was not a surprise to those in the Cook Islands, in both government and the private sector, who have worked tirelessly over the past few years to ensure the Cook Islands meets its international obligations in regards to combatting money laundering and terrorist financing as well as providing transparency of financial information to target tax evasion.
The EU’s stated goal for its list is to improve tax good governance globally, and to ensure that the EU's international partners respect the same standards as EU member states do. Interestingly, EU member states have not been subjected to the EU’s criteria or the listing process. The EU has however given an assurance that its member states do actually adhere to tax good governance standards.
The EU has based its list on a wider set of good governance criteria than the OECD. The OECD’s focus has been on international transparency standards. The EU‘s criteria, in addition to transparency, includes fair taxation, adherence to BEPS standards, and the level of taxation, where this might encourage artificial structures and arrangements. The Cook Islands government has written to the Chairperson of the EU’s Code of Conduct Group on Business Taxation affirming the country’s commitment to the EU’s standards.
This commitment is further proof that the Cook Islands is at the forefront of international best tax practices, already evidenced by its membership of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes and its signing of the Multilateral Convention on Mutual Administrative Assistance on Tax Matters and the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information which sets out the common reporting standard (“CRS”). The Cook Islands will commence the automatic exchange of financial information under CRS in 2018 and its financial institutions have already commenced providing information to the IRS pursuant to FATCA in regards to US persons’ Cook Islands accounts.