CARICOM opposes EU tax haven blacklist
CARICOM Secretary-General Irwin LaRocque (Delano Williams Photo)
CARICOM Secretary-General Irwin LaRocque (Delano Williams Photo)

AS four territories within the Caribbean Community (CARICOM) have been blacklisted by the European Union (EU) for being part of the EU List of Non-Cooperative Tax Jurisdictions, CARICOM on Tuesday called on the European Union to enter an early dialogue with CARICOM states as a group, with a view to agreeing on benchmarks for good tax governance that could be applied in a fair and equitable manner, taking account of the economic circumstances and capacity of all their jurisdictions.

On December 5, the EU announced that the first-ever EU list of non-cooperative tax jurisdictions has been agreed by the Finance Ministers of EU member states during their meeting in Brussels.

Trinidad and Tobago, Grenada, St. Lucia and Barbados, have been listed as four of 17 non-cooperative tax jurisdictions. “In total, ministers have listed 17 countries for failing to meet agreed tax good- governance standards. In addition, 47 countries have committed to addressing deficiencies in their tax systems and to meet the required criteria, following contacts with the EU,” a statement published on the commission’s website stated.

“This unprecedented exercise should raise the level of tax good-governance globally and help prevent the large-scale tax abuse exposed in recent scandals,” the statement added. Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The adoption of the first- ever EU blacklist of tax havens marks a key victory for transparency and fairness.” He noted that the process does not stop there as intensified pressure must be placed on listed countries “to change their ways.”

“Blacklisted jurisdictions must face consequences in the form of dissuasive sanctions, while those that have made commitments must follow up on them quickly and credibly. There must be no naivety: promises must be turned into actions. No one must get a free pass,” Moscovici stated.

But CARICOM has objected strongly to the European Union’s blacklisting of four CARICOM jurisdictions, calling the move a “false narrative” that ignores the continued and diligent efforts made by CARICOM member states to comply with the onerous regulatory measures.
CARICOM countries, the secretariat said, has worked tirelessly to comply with the standards for tax transparency, accountability and cooperation, enunciated by the Organization of Economic Cooperation and Development (OECD) and associated institutions such as the Global Forum and the Financial Action Task Force (FATF).

CARICOM said the four CARICOM countries were blacklisted under the guise that they maintain harmful preferential tax regimes or have failed to comply with international standards for tax transparency and good governance. “This classification will significantly damage the reputations of these jurisdictions even if they are eventually removed from the list. The Caribbean Community considers the EU’s unilateral screening process to be unjust and inequitable since it has not been applied to its own members nor subject to peer review examination,” a statement from CARICOM said on Tuesday.

According to the statement, the screening process involves an assessment of a country’s tax regime against criteria, which in their entirety go beyond the generally acceptable international tax transparency and accountability standards, compliance with which CARICOM states have worked assiduously over the past several years.

Moreover, the regional body said the implementation of the expanded scope of the EU’s criteria requires domestic legislative and administrative changes that go beyond the timelines set by the EU Code of Conduct Group. “Such reforms cannot be undertaken by our small jurisdictions without considerable technical assistance due to significant capacity constraints.”

Additionally, the decision to apply both non-tax and tax-related defensive measures is also of great concern to CARICOM member states, “as it seeks to coerce compliance with screening benchmarks that have been unilaterally determined by the EU and that are not applicable to its own members.”

The recommended non-tax and tax-related defensive measures will serve as a deterrent to much-needed existing and new foreign private investments that are required to grow our small, highly- vulnerable economies and promote sustainable development, CARICOM said. “In addition to being harmful, these recommendations are inconsistent with the objectives and principles enshrined in the EU-CARICOM Economic Partnership Agreement.

The Caribbean Community recognises the right of every state to protect its revenue base, but the determination of standards, which might be adopted by other states, must be undertaken in a mutually inclusive process.”

Therefore, the Caribbean Community calls upon the EU to desist from the imposition of any defensive measures and to enter an early dialogue with CARICOM states as a group with a view to agreeing on benchmarks for good tax governance that could be applied in a fair and equitable manner, taking account of the economic circumstances and capacity of all their jurisdictions.

Among those on the EU List of Non-Cooperative Tax Jurisdictions are American Samoa, Bahrain, Guam, Korea (Republic of), Macao SAR, Marshall Islands, Mongolia, Namibia, Palau, Panama, Samoa, Tunisia and United Arab Emirates.

Meanwhile, the idea of an EU list was conceived by the commission and subsequently taken forward by member states. Compilation of the list has prompted active engagement from many of the EU’s international partners. However, work must now continue as 47 more countries should meet EU criteria by the end of 2018, or 2019 for developing countries without financial centres, to avoid being listed, the EU statement said.

The EU listing process is expected to continue into 2018 and as a first step, a letter will be sent to all jurisdictions on the EU list, explaining the decision and what they can do to be de-listed. “The commission and member states (in the Code of Conduct Group) will continue to monitor all jurisdictions closely, to ensure that commitments are fulfilled and to determine whether any other countries[sic’ should be listed in the future.”

A first interim progress report should be published by mid-2018. The EU’s list will be updated at least once a year.

SHARE THIS ARTICLE :
Facebook
Twitter
WhatsApp

Leave a Comment

Your email address will not be published. Required fields are marked *

All our printed editions are available online
emblem3
Subscribe to the Guyana Chronicle.
Sign up to receive news and updates.
We respect your privacy.