The offshore countries blacklist is an enumeration of territories and countries, which provide preferential taxation, ensure confidentiality of transactions and do not require any financial reporting or accounting reports. The reason for generating blacklists was the fact that large sums of money bypassed the treasury of the governments with the help of offshore companies.

Each country sets its own criteria according to which a particular jurisdiction falls into the blacklist. As a rule, the economic relations, differences in tax regimes and other parameters are taken into consideration.

The offshore countries blacklist of the Ministry of Finance

The most significant offshore jurisdictions blacklists are considered those made by the following government agencies: the Ministry of Finance, the Central Bank, the Federal Tax Service, the FATF and the OECD.

The most important of these documents is the offshore blacklist of the Ministry of Finance. It determines the mode of payment of taxes while receiving dividends. According to it, for example, there may be special treatment of such income. As an example, if the organization receiving dividends owns more than 50% of the share capital of the company paying dividends, then it is exempted from taxes. If dividends are paid by a foreign company, the absence of taxes affects only those organizations, which are located in the countries not included in the blacklist of the Ministry of Finance. In this case, the taxes on dividends are applied.

There is a large number of countries in the blacklist of the Ministry of Finance. They are divided into three groups:

• The most reliable: Singapore, Malta, Montenegro, Ireland, the Channel Islands, the Isle of Man, Hong Kong, Switzerland.
• Classical: the Bahamas, New Zealand, Panama, Belize, the Seychelles, Monaco, etc.
• Unreliable: Aruba, Vanuatu, Andorra, Liberia, Nauru, the Marshall Islands, Anjouan, and Liechtenstein.

What does it mean to get blacklisted?

Being in the offshore blacklist of the Ministry of Finance or another entity does not necessarily mean that the company is not worth dealing with.

In practice, it means that if an inland company, for example, makes an import deal with an offshore company, the permitted total cost may be limited to some certain percentage of the total amount of transaction. This is the way the state raises taxes dealing with offshore companies. But when the blacklisted offshore company is a customer (i.e. some company exports goods or services), then there are no differences in taxation.

• Checked / Updated: 07.25.2022
• Published on: 07.14.2016
• Author: Elvira Savir