On 13 March 2018, the European Union (EU) removed Bahrain from its list of "uncooperative jurisdictions for tax purposes" (EU blacklist¹), along with the Marshall Islands and Saint Lucia.²

In response to the Council of the European Union original conclusions stating that Bahrain: (i) does not cover all EU Member States for the purpose of automatic exchange of information and has not signed and ratified the Organisation for Economic Co-operation and Development Multilateral Convention on Mutual Administrative Assistance as amended (OECD MAC); (ii) facilitates offshore structures and arrangements aimed at attracting profits without real economic substance; and (iii) does not apply the BEPS³ minimum standards and did not commit to addressing these issues, Bahrain has made firm commitments to address these issues.

Bahrain is joining the group of other non-listed/delisted countries that are excluded from the EU blacklist based on commitments to address outstanding issues within the agreed deadline.

The removal of Bahrain from the EU blacklist means that the commitments made by Bahrain to address outstanding issues will be strictly monitored and reviewed periodically.

Delisted jurisdictions will not be subject to the proposed defensive measures outlined in the Council conclusions.⁴ These jurisdictions, however, are expected to deliver on their commitments. Otherwise, there is a risk of again being included in the EU blacklist and in due course being subject to the contemplated defensive measures.

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ENDNOTES

¹ See EY Global Tax Alert, Bahrain included in EU list of uncooperative jurisdictions for tax purposes, dated 19 December 2017.

² After the removal of these jurisdictions, American Samoa, Guam, Namibia, Palau, Samoa, Trinidad and Tobago are the remaining countries on the EU blacklist, with the addition of the Bahamas, Saint Kitts and Nevis and the US Virgin Islands.

³ Base Erosion and Profit Shifting.

⁴ See EY Global Tax Alert, Council of the European Union publishes list of uncooperative jurisdictions for tax purposes, dated 6 December 2017.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Consulting W.L.L., Manama

• Ivan Zoricic
  ivan.zoricic@bh.ey.com
• Shankar P B
  shankar.pb@bh.ey.com
• Ajith Raghunath
  ajith.raghunath@bh.ey.com

Ernst & Young Belastingadviseurs LLP, Rotterdam

• Marlies de Ruiter
  marlies.de.ruiter@nl.ey.com

Ernst & Young LLP, Middle East Desk, Houston

• Gareth Lewis
  gareth.lewis1@ey.com

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ATTACHMENT

PDF version of this Tax Alert