The Isle of Man could face a threat of being placed automatically on a tax haven blacklist following a vote by MEPs last week.

But the Manx government believes that the risk of the island ending up on the blacklist is small and insists we have long complied with all international standards on tax transparency and co-operation.

We last narrowly avoided being blacklisted by the EU in 2019.

But MEPs say being removed from the blacklist should not be the result of only ’token tweaks’ to that jurisdiction’s tax system.

They adopted a resolution with 587 votes in favour, 50 against and 40 abstentions, that calls the current EU list of tax havens ’confusing and ineffective’.

The European Parliament is proposing changes to widen the criterion to judge if a country’s tax system is fair or not.

A 0% tax rate policy like the Isle of Man’s will automatically lead to being placed on the blacklist.

MEPs said the list, set up in 2017, has had a ’positive impact’ so far but has ’failed to live up to its full potential’.

They propose changes that would make the process of listing or delisting a country more transparent, consistent and impartial.

Criteria should be added to ensure that more countries are considered a tax haven and to prevent countries from being removed from the blacklist too hastily, MEPs say.

EU member states should also be screened to see if they display any characteristics of a tax haven, and those falling foul should be regarded as tax havens too.

Dutch Labour MEP Paul Tang, who chairs the European Parliament’s sub-committee on tax matters, said: ’By calling the EU list of tax havens "confusing and inefficient", the Parliament tells it like it is.

’Member states forgot something when composing it: actual tax havens

’Guernsey, the Bahamas and now the Cayman Islands are only some of the well-known tax havens that member states have taken off the list.’

He said it was unacceptable to refuse to properly address tax avoidance.

The island was one of 40 jurisdictions placed on a grey list in December 2017, deemed not to be fully compliant with EU and international tax standards.

Our tax regimes was accused of ’facilitating offshore structures that attract profits without real economic activity’.

The Isle of Man was given a deadline of one year to comply with good tax governance and avoid being blacklisted.

And we were officially taken off the EU Code of Conduct’s grey list in December 2018 after drawing up measures to address the concerns.

These included introducing legislation requiring companies that are tax resident in the Isle of Man and which operate in these business sectors to demonstrate a minimum level of substance here.

Treasury Minister Alfred Cannan told iomtoday that this was an advisory vote only by MEPs but that the Manx government would be closely monitoring developments.

The European Parliament does not initiate legislation.

A government spokesman said the island has a long standing position of complying with international standards of taxation.

He said: ’This resolution does not change the law and the Isle of Man is considered a co-operative jurisdiction by the EU.’