Turkey Faces Tax Blacklist If No Changes to Policy, Austria Says

(Bloomberg) -- Turkey has until the end of the year to comply with European Union demands on tax transparency, or else risk being added to a list of countries that could face financial sanctions, according to Austrian Finance Minister Gernot Bluemel.

The EU’s 27 finance ministers meeting in Brussels determined that Turkey currently doesn’t comply with the bloc’s requirements, and gave Ankara until the end of the year to fall in line, Bluemel said before the gathering on Tuesday. The rules include bilateral agreements to automatically exchange bank information with EU members, which include Cyprus.

“If Turkey continues to violate the rules, we’ll argue for it to get on the blacklist,” Bluemel told reporters. “We’ll monitor until the end of the year and make a decision then.”

The tax haven debate adds to a number of issues in which the EU faces the choice between enforcing its own rules and jeopardizing an agreement under which Turkey helped stem the flow of migrants to Europe in exchange for financial assistance.

Fraying Relations

Fights over Ankara’s gas prospecting off the coast of Cyprus, sliding democratic standards under Recep Tayyip Erdogan’s rule and Turkish interventions in Syria and Libya have pushed relations between Brussels and Turkey to the breaking point.

Turkey, along with more than 20 other countries and jurisdictions, had until the end of 2019 to meet EU criteria concerning automatic bank information exchange as well as fair corporate tax laws and adherence to Organization for Economic Cooperation and Development measures to prevent base erosion and profit shifting.

Read more: EU Ministers Hit Pause on Blacklisting Turkey as Tax Haven

The EU adopted a list of sanctions at the end of 2019 that EU members can use against countries on the tax haven blacklist. These include withholding taxes on payments such as dividends sent from the EU to companies based in the blacklisted country or jurisdiction.

The latest update of the EU’s blacklist of tax havens includes American Samoa, the Cayman Islands, Fiji, Guam, Oman, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, U.S Virgin Islands, and Vanuatu.

--With assistance from Nikos Chrysoloras and Zoe Schneeweiss.

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, ;Ben Sills at bsills@bloomberg.net, Richard Bravo, Nikos Chrysoloras

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