Mnuchin Objects to EU Council's Inclusion of U.S. Territories as 'Non-Cooperative'

Mr. Jeppe Tranholm-Mikkelsen
Secretary-General of the Council of the European Union
General Secretariat of the Council
Council of the European Union
Brussels, Belgium

Dear Mr. Secretary-General:

I am writing to address the release of the list of non-cooperative jurisdictions for tax purposes adopted by the Council of the European Union (the Council) on December 5, 2017.

The United States has played a leading role in the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and is an original member of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum). As part of its participation in these initiatives, the United States is subject to rigorous peer reviews on the implementation of international tax standards.

In light of our existing engagement in these areas through the work of the Inclusive Framework on BEPS and the G-20, the United States disagrees with the Council's decision to subject non-EU jurisdictions to a separate review process and to release its own list of “non-cooperative jurisdictions” for tax purposes. The Council's review of jurisdictions is duplicative of the process undertaken by the G-20 and OECD to identify a comprehensive list of non-cooperative jurisdictions for tax purposes and may undermine the international consensus on standards for a level playing field across jurisdictions.

We particularly object to the inclusion of American Samoa and Guam on the list. As territories of the United States, American Samoa and Guam participate in the international community through the United States. The commitments and actions of the United States in implementing BEPS minimum standards extend to the U.S. territories.¹ Furthermore, the U.S. territories are evaluated as part of the review of the United States in the Global Forum peer review process and under the criteria for non-cooperative tax jurisdictions established by the G-20. Therefore, American Samoa, Guam, and the other U.S. territories are already subject to monitoring of the implementation of international tax standards.

For these reasons, the United States disagrees with the Council's decision to consider the U.S. territories separately from the United States. Taking into account both the laws in American Samoa and Guam and their connection to the European Union, there is no basis for concluding that American Samoa and Guam have any role in promoting the evasion or avoidance of taxes imposed by European Union member states.

The United States supports international cooperation in tax transparency and remains firmly committed to working on the issues that concerned the Council when it announced its intention to create the list of non-cooperative jurisdictions for tax purposes through the G-20 and the Inclusive Framework on BEPS. Furthermore, the United States would like to reiterate the close connection between the legal framework in place in the U.S. territories and the legal framework in the rest of the United States.

The United States urges the Council to reconsider both the decision to analyze the U.S. territories separately from the United States and the decision to include American Samoa and Guam on its list of non-cooperative tax jurisdictions. The United States has full confidence in American Samoa, Guam, and all of the U.S. territories; their tax administrations; and their compliance with international norms with respect to taxation.

Sincerely,

Steven T. Mnuchin

cc:
Mr. Toomas Toniste, Minister of Finance of Estonia
Ms. Fabrizia Lapecorella, Director General of Finance, Ministry of Economy and Finance of Italy