Bahrain Mirror- Reuters: European Union finance ministers agreed new measures on Tuesday to force accountants and banks to report aggressive tax schemes that help companies shift profits to low-tax countries.

Ministers also added the Bahamas, the U.S. Virgin Islands and Saint Kitts and Nevis to a blacklist of tax havens, while Bahrain, the Marshall Islands and Saint Lucia were delisted, confirming earlier Reuters reports.

Under the rules, proposed by the European Commission in June, accountants, banks and lawyers would be required to inform authorities about "potentially aggressive tax planning arrangements" set up for their clients. The 28 EU states will also share information on harmful tax planning in a bid to discourage the most aggressive tax avoidance schemes.

"It is a new progress for tax justice in the European Union," EU tax commissioner Pierre Moscovici told ministers after they agreed the overhaul.

Once the new rules are finalised and approved by the European Parliament, tax advisers in the EU will risk fines if they do not report potentially harmful cross-border tax schemes.

Penalties should be "effective, proportionate and dissuasive" but EU states will maintain discretion in setting sanctions or fines at national level.

If there is no intermediary, or the tax adviser is located outside the EU, the company or individual using the arrangement will be obliged to disclose it.

EU governments agreed on a compromise text put forward by the Bulgarian presidency of the EU, which slightly softened the Commission's original proposal. Tax reforms require unanimity among the 28 member states.

Cross-border tax arrangements set up with jurisdictions that have a zero or "almost zero" corporate rate - such as the Channel Islands, Bahamas, Bahrain and the Cayman Islands - must be reported, despite initial opposition from some governments.

But ministers scrapped a requirement to report tax schemes with jurisdictions whose corporate rate is lower than 35 percent of the statutory average within the EU - which could have forced reporting for schemes involving countries with a tax rate of around 7 percent.

Some states had argued such a requirement "would cause an administrative burden disproportionate to the objectives" of the new rules, a working document prepared by Bulgarian officials showed.

Smaller EU members like Luxembourg and Malta have in the past opposed stricter rules to prevent tax avoidance, fearing they could harm competitiveness. But their finance ministers gave the green light to the Bulgarian compromise.

Some members, including Britain, Ireland and Portugal, have already introduced penalties at national level for intermediaries helping set up aggressive tax schemes.

TAX HAVENS

EU governments also added Anguilla, The British Virgin Islands, Dominica and Antigua and Barbuda to a "grey list", which now includes 62 jurisdictions that do not respect EU anti-tax avoidance standards but have committed to change their practices.

Bulgarian Finance Minister Vladislav Goranov told a news conference after the meeting that commitments made by grey list countries will be made public, a move welcomed by anti-corruption groups because it will increase transparency.

Ministers agreed to move Bahrain, the Marshall Islands and Saint Lucia from the black to the grey list, after they committed to change their tax practices.

American Samoa, Guam, Namibia, Palau, Samoa, and Trinidad and Tobago were already on the blacklist set up in December.

Blacklisted jurisdictions could face reputational damage and stricter controls on their financial transactions with the EU, although no sanctions have been agreed by EU states yet.

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