CARICOM rejects tax haven listings

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GEORGETOWN, Guyana — The Caribbean Community (CARICOM) has stated its strong objection to the recent decision by the European Commission to “blacklist” a number of CARICOM member states for allegedly not co-operating on tax law enforcement with European Union countries.

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The Community, in a statement issued Thursday, described the Commission’s assertion as patently false in view of the continued efforts by CARICOM member states to comply with the onerous and unilaterally imposed regulatory measures.

The Commission earlier this month named Anguilla, Antigua and Barbuda, The Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, St Kitts and Nevis, St Vincent and the Grenadines and the Turks and Caicos Islands on its list of non-co-operative tax jurisdictions and counties.

The Turks and Caicos Islands (TCI) and St Vincent and the Grenadines (SVG) have also both added their objections to their inclusion on the EU list.

The TCI is compliant with the Global Forum’s standards on exchange of tax information said its minister of finance Washington Misick on Thursday.

“The Turks and Caicos was commended by the Global Forum for the tremendous progress that we have made in improving international tax transparency,” Misick pointed out. “The Global Forum considers the TCI as ‘co-operative’.

“Indeed, following the UK’s G8 presidency, we were early adopters of the automatic exchange of tax information, committing to share information with our partners by 2017.

“I assure the international community that we remain committed to and actively involved in achieving these ideals.”

Despite the EC’s claims, the Global Forum believes that countries identified are either fully or largely compliant, and have committed to Automatic Exchange of Information, sometimes even as early adopters, such as the TCI.

Misick also noted that the EC list appears to deal only with corporate tax and does not contain any lists from larger EU jurisdictions like Germany, France or the United Kingdom.

The TCI will now work with the Organization for Economic Co-operation and Development (OECD), the Global Forum and its sister territories to express collective concern to the EC.

The SVG’s Financial Services Authority (FSA) said in a release that there appears to be no rationale or at best, no reasonable rationale for the blacklisting of St Vincent and the Grenadines save for the fact that this country operates an international financial services industry, albeit very small.

The EU process of blacklisting seems to be that countries were blacklisted that were found by at least ten of their EU members to be ‘non- cooperative’ in relation to tax matters. Eleven EU countries named SVG as being non cooperative – Bulgaria, Croatia, Estonia, Greece, Italy, Latvia, Lithuania, Poland, Portugal, Slovenia and Spain.

SVG has never had a request for tax information or any other information from any of those countries, nor refused any international request for tax information whatsoever, the FSA said.

Methodology

The countries blacklisted were apparently assessed on two limbs – good governance (transparency and exchange of information) and fair tax competition. The EU may have possibly categorized SVG under the latter limb – by reason of operating an offshore financial industry with tax benefits. The same would have applied to the other Caribbean territories but, unsurprisingly, it is not a clean sweep of all international finance centres (IFCs) or offshore jurisdictions, as many powerful IFCs jurisdictions, which by the same token ought to be have been blacklisted, have not been (e.g. Jersey, Switzerland, Luxembourg). This is so even though the Netherlands, Ireland and Luxembourg are under investigation by the EU Competition authorities for facilitating aggressive tax avoidance, the FSA noted.

No information or evidence has been provided to SCG upon which a conclusion can be drawn that this country has been or is non-compliant, non-receptive or non-cooperative with any international tax initiative or any specific request for information or case for tax avoidance by any of the named countries, or from the EU for that matter. No information has been provided that persons from the named countries are hiding assets in this country.

OECD Position

SVG has queried this blacklisting with the Organization for Economic Cooperation and Development (OECD), the international tax standard setter, which is the relevant international body for tax compliance issues. SVG has been a member of the OECD Global Forum since 2009 and, prior to that, been actively involved in OECD initiatives since 2002.

In a formal statement by the Global Forum issued to its members on June 19, 2015, the OECD Global Forum has in effect disassociated itself with the action of the EU and underscored the fact that it is their own assessment which is the relevant assessment for the purposes of determining a country’s cooperation in tax matters. An excerpt from the statement is reproduced below:

“As the OECD and the Global Forum we would like to confirm that the only agreeable assessment of countries as regards their cooperation is made by the Global Forum and that a number of countries identified in the EU exercise are either fully or largely compliant and have committed to AEOI, sometimes even as early adopters. Without prejudice to countries’ sovereign positions, we are happy to confirm that these jurisdictions are cooperative and we would like to commend the tremendous progress made over the past years as well as the cooperation and integrity of the Global Forum process.

“We have already expressed our concerns and stand ready to further clarify to the media the position of the affected jurisdictions with regard to their compliance with the Global Forum standards.”

From the above, it is clear that the EU’s conclusions do NOT correspond with those of the Global Forum and that the Global Forum is willing to extend support, as described, to countries like SVG, which they have already rated as fully or largely compliant, through their own processes.

SVG Position

In view of the extensive work undertaken and full cooperation given by SVG internationally over the years, the relevant authorities in SVG, including the FSA, consider the present blacklisting by the EU Commission to be arbitrary and not supported by any objective or transparent process. The blacklisting is considered unjust, amounting to an abuse of process/power. This country has amended its laws and implemented a tax information exchange system to conform to international standards and built a successful tax information exchange regime.

Of absolute significance is that SVG has already been assessed as NOT being a tax haven by the OECD, the responsible international body for international tax compliance purposes. SVG is also ‘white listed’ by the OECD, having very successfully completed its mandatory 2 phased assessments (Phase 1 and 2 Peer Reviews). SVG is rated ‘Largely Compliant’ by the OECD Global Forum in relation to its tax compliance regime, which is globally accepted as a very positive rating.

SVG intends to object to the blacklisting on an individual basis and from a unified Caribbean front.

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