Answer given by Ms Urpilainen on behalf of the European Commission
The listing process is the instrument whereby the EU promotes tax good governance internationally. It allows the EU to continue the dialogue with concerned jurisdictions, and to carry out its development cooperation agenda.
Dialogue and outreach are central to the exercise. Besides the political and policy dialogue in the framework of development cooperation with the concerned jurisdictions, regular technical discussions as well as technical assistance have helped many of them to comply with the required standards and strengthen their tools against tax abuse.
Threatening to cut or cutting development aid would leave no space for political and policy dialogue with these jurisdictions, which will go counter to the ultimate goal of improving tax good governance and compliance globally.
This approach is coherent with the Commission's agenda to support domestic revenue mobilisation in developing countries, and in line with the Addis Tax Initiative and Sustainable Development Goals.
Beyond the reputational risk, listed jurisdictions are subject to defensive measures. At EU level this concerns the distribution of EU funds, and in particular EU financial instruments and budgetary guarantees.
Concerning EU financial instrument and budgetary guarantees, the EU funds cannot be granted to or channelled or transited through entities in jurisdictions that feature on the EU list of non-cooperative jurisdictions for tax purposes, unless these EU funds are addressed to projects physically implemented in these jurisdictions, which themselves do not support actions that contribute to tax avoidance, tax fraud or tax evasion.
Under the Neighbourhood, Development and International Cooperation‐Global Europe Instrument, the EU is pressing these jurisdictions through political and policy dialogue, and provides technical assistance, whenever possible.