Mongolia moves out of EU ‘grey’ list
On October 6, the Council of the European Union removed Mongolia from its grey list of non-cooperative jurisdictions for tax purposes after the country deposited the instruments of ratification of the Organization for Economic Co-operation and Development (OECD)’s Convention on Mutual Administrative Assistance in Tax Matters.
While Mongolia was removed from Annex II – state of play of pending commitments – together with Bosnia and Herzegovina, Anguilla and Barbados were added to the EU list of non-cooperative jurisdictions for tax purposes. Cayman Islands and Oman were removed from the list, after having passed the necessary reforms to improve their tax policy framework.
...Jurisdictions are assessed on tax transparency, fair taxation,
and implementation of international standards against tax base erosion and profit shifting...
After noting that several deadlines related to Annex II have been extended due to the COVID-19 pandemic, the council stated, “Mongolia and Bosnia and Herzegovina having deposited the instruments of ratification of MAC as amended, respectively on February 19, 2020 and September 21, 2020, the group agreed at its meetings on July 15 and September 21, 2020 that they should be removed from section 1.3 of Annex II.”
The council revised the EU list of noncooperative jurisdictions for tax purposes (Annex I) and the state of play with respect to commitments taken by cooperative jurisdictions to implement tax good governance principles (Annex II) in February this year. The jurisdictions are assessed on the basis of a set of criteria laid down by the council in 2016, concerning tax transparency, fair taxation, and implementation of international standards against tax base erosion and profit shifting.
Consultant of the Legal Department at the Ministry of Foreign Affairs B.Mandakhbileg, who served as special diplomatic envoy in charge of affairs regarding Mongolia’s removal from the European Union tax haven blacklist, provided more information about the latest event regarding the EU on Wednesday.
“The EU, an important third neighbor of Mongolia, has removed Mongolia from the list of non-cooperative jurisdictions for tax purposes. It is commendable to be removed from this list. On December 5, 2017, the EU blacklisted Mongolia. The government and relevant ministries took immediate action and the country left the blacklist 49 days later, on January 23, 2018,” he said.
“We have an obligation to the EU to introduce OECD’s standards on taxation in Mongolia, and provide the European side with the necessary information when EU members evade taxes and come to Mongolia. This obligation shall be complied with within the legal framework. Mongolia has acceded to the Convention on Mutual Administrative Assistance in Tax Matters. Parliament ratified this document and the president signed the instruments of ratification documents on January 3. The convention entered into force on June 1.”
After being removed from the EU blacklist in January 2018, the country was placed on the EU’s grey list.
B.Mandakhbileg clarified that Mongolia hasn’t been removed from the Financial Action
Task Force (FATF)’s list of countries with strategic deficiencies, commonly referred to as the grey list, yet but the EU’s latest decision will indirectly help the country leave this list as well.
“Back in 2017, Mongolia was named a tax haven but this is no longer the case. We’ve slipped out of EU’s list. As for FATF’s case, we successfully fulfilled the 40 recommendations it gave to Mongolia and a team recently conducted an onsite visit. FAFT will convene around October 20. We’re hoping to hear good news from that meeting,” he stated.