The Macau government, after criticizing the European Union decision last month to include the territory on a blacklist of 17 jurisdictions accused of being tax havens, has welcomed last week’s delisting.
Macau was listed as a non-cooperative tax jurisdiction on December 5 last year, putting the territory at risk of facing EU economic sanctions.
However, it was delisted late last week along with seven other territories – namely Barbados, Grenada, Mongolia, Panama, South Korea, Tunisia and the United Arab Emirates – without an explanation from EU authorities.
The Macau government criticized the listing of the MSAR in the context of what it sees as successive steps by local authorities to curb cross-
border tax evasion. It described the inclusion on the list as “unilateral”, “one-sided” and “not reflective of the actual situation of Macau.”
Though the European Union did not disclose the measures promised or taken by the MSAR to justify its delisting, the Macau government has indicated that the decision is related to the progress made on adopting an international tax cooperation convention.
According to a statement from the Government Spokesperson Office, “the Macao SAR has been actively in contact with the EU to express the position and describe the work progress and expected time-line of the extension of the ‘Multilateral Convention on Mutual Assistance and Administration in Tax Matters’ to the Macao SAR, which ultimately leads to a proper solution of the concerned issue.”
“At present, the Central Government has already authorized the Government of the Macao SAR to sign the ‘Multilateral Competent Authority Agreement.’ This will allow the Macau SAR to exchange financial account information with other tax jurisdictions including all EU member states,” it continued. “Simultaneously, the legal regime of offshore business sector will be improved to further enhance the administrative work of taxation.”
The delisting of Macau now places the territory on a “grey list” of over 40 countries and jurisdictions that the EU will monitor closely.
The narrow escape means that the MSAR will not immediately face the possibility of EU sanctions.
In 2016, merchandise imports from the EU were valued at MOP17.03 billion, almost a quarter of Macau’s total merchandise imports. At the same time, some MOP25.84 billion worth of goods were imported from mainland China, casting doubt over the effectiveness of EU sanctions that would not affect the People’s Republic.
Nevertheless, the EU is hailing whatever measures were taken or promised by the MSAR government and the seven other jurisdictions as a success.
French Finance Minister Bruno Le Maire said that the fresh commitments show “that European pressure is effective,” and called for tougher action on tax havens.
“Naming and shaming will not be enough. There also must be sanctions,” he said.
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