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EU to spare Turkey from tax blacklist: sources

Turkish gas exploration in the eastern Mediterranean has angered the EU. [Getty]

Date of publication: 12 February, 2021

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The EU wants Turkey to comply with international standards related to its commitments on tax evasion.

The EU is set to give Turkey more time to adhere to its commitments on tax evasion, sources said on Friday, raising concerns that Ankara is being spared the bloc's blacklist for political reasons.

Ties between the EU and Turkey have been fraught, especially after Ankara pushed gas exploration in the eastern Mediterranean last year, infuriating Cyprus and Greece.

However, the tensions have eased in recent weeks with the diplomacy of Germany, which is sensitive to keep Turkey compliant with a migration pact that keeps a tight control on the Turkish border with the EU.

According to several sources, the EU's 27 member states will next week accept to once again delay the blacklisting of Turkey, which was already given a break a year ago.

Turkey is accused of failing to comply with international standards on the automatic exchange of tax information, a problem in particular for EU countries with a big Turkish diaspora.

The delay, however, could come with an understanding that putting off the decision any further will no longer be tolerated, with a deadline set for later this year.

"It is important to be rigorous and to ensure that countries, where difficulties have been identified, make commitments and fulfil them," one EU diplomat said.

In this case, "it would have been logical, as it has been in comparable situations in the past", for Turkey to be added to the list. 

The deadline for Turkey was still under negotiation among the 27 member states on Friday, diplomats said, with hopes that it would not have to be argued over by EU finance ministers at talks next week.

Read more: How Gulf reconciliation could impact the Eastern Mediterranean

The main concern for some member states is that the EU's blacklist will become politicised, when its criteria was expected to be objective and free of diplomatic considerations.

The blacklist was first drawn up in 2017 in the wake of several scandals, including the Panama Papers and LuxLeaks, which pushed Brussels into doing more to fight tax evasion by multinationals and the rich.

EU member countries cannot be on the list and blacklisted countries face only limited sanctions, consisting of freezing them out of European aid or development funding.

The previous diplomatic dust-up came in 2019 over the inclusion of the United Arab Emirates, which Italy resisted. The UAE was added, but was later removed. 

The list currently holds: Anguilla, American Samoa, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

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