Caribbean Nations Moving to Get off New EU Blacklist

BRIDGETOWN, Barbados, Friday March 15, 2019 – Caribbean nations named on a new blacklist released by the European Union (EU) this week are taking steps to be struck off that list of countries considered non-cooperative tax jurisdictions, although some say they were surprised at their inclusion in the first place.

On Wednesday,
the EU published the list based on what it said was an “intense process of
analysis and dialogue” by EU Finance Ministers, following screening by the EU
Commission which over the last year assessed 92 countries based on the criteria
of tax transparency, good governance and real economic activity, as well as the
existence of a zero corporate tax rate.

The 15
non-cooperative tax jurisdictions included Trinidad and Tobago, and the US
Virgin Islands which is said have taken no commitments since the first
blacklist adopted in 2017; and Barbados, Belize, Bermuda, and Dominica which the
EU said had been previously moved to the grey list following commitments, but had
to be blacklisted again for not following up.

“Dozens of
countries have abolished harmful tax regimes and have come into line with
international standards on transparency and fair taxation. The countries that
did not comply have been blacklisted, and will have to face the consequences
that this brings,” said Pierre Moscovici, Commissioner for Economic and
Financial Affairs, Taxation and Customs. “We are raising the bar of tax good
governance globally and cutting out the opportunities for tax abuse.”

“The EU
tax havens list is a true European success. It has had a resounding effect on
tax transparency and fairness worldwide”, said Pierre Moscovici, Commissioner
for Economic and Financial Affairs, Taxation and Customs. “Thanks to the
listing process, dozens of countries have to abolish harmful tax regimes and fall
in line with international standards on transparency and fair taxation The
countries that did not comply have been blacklisted, and will have to face the
consequences that this brings. We are raising the bar of tax good governance
globally and cutting out the opportunities for tax abuse.”

The Dominica
government has expressed surprise and dismay at its inclusion in the list,
accusing the EU of acting “unfairly and without proper justification”.

It said the
island was put on the grey list in December 2017 despite the complete
devastation caused by Hurricane Maria that year.

“With our
country shut down after Maria, electricity down island-wide, communications
disrupted, our people homeless and in desperate need of immediate assistance,
90 per cent of homes damaged and in some instances destroyed, roads impassable,
businesses shut down for an extended period, the EU gave us, in our devastated
condition, no more time than any other country to comply with their demands,”
it said, adding that despite the circumstances, Dominica ensured that it
complied with all the legislative changes that were requested by the EU.

The
government noted that one of requirements requested by the EU was that Dominica
join the Convention on Mutual Administrative Assistance in Tax Matters which
requires the sanction of the OECD. That would have would have allowed for the
passage of the Automatic Exchange of Information Act which the EU had
requested.

However, the
government said that although Dominica applied since May 31, 2017 to the OECD
to join that Convention, and subsequent correspondences reiterated its
commitment and desire to join, “through absolutely no fault of the Government
of Dominica, we have to date, not been given final clearance from the OECD or a
substantive response to our application.”

It added
that senior government ministers and public officers have explained these facts
to EU representatives, the EU Code of Conduct Group, EU TAXUD and the EU
Council on numerous occasions but to no avail.

“In February
this year, we wrote to the EU requesting an extension of time to allow for a
response to be obtained from the OECD to our application. Regrettably, we
received no response,” it said, explaining that Dominica was subsequently
blacklisted by the EU on the grounds that it does not apply any automatic
exchange of financial information, has not signed and ratified the OECD
Multilateral Convention on Mutual Administrative Assistance as amended and has
not yet resolved these issues.

“This
statement of the grounds is misleading, and manifestly unfair. The only reason
why Dominica “has not signed and ratified the OECD Multilateral Convention on
Mutual Administrative Assistance as amended ‘ is that the OECD has to date not
given the go ahead to Dominica to sign on. In other words, Dominica is being
penalized while it is awaiting a response, and notwithstanding there was and is
nothing else it can do or could have done,” the government said.

Meantime,
Bermuda’s Premier David Burt said the news of Bermuda’s inclusion on the list
was a “setback”, but stressed that he expected it would be removed soon.

He later
told the House of Assembly that the placement was due to a “minor technical
omission in our regulations”, and despite the omission being discovered and immediately
addressed, the reinsertion of an omitted line “appears not to have been good
enough for the EU”.

“It is disappointing that after endless hours of crafting a regime that would meet the required test and in fact having one now in force has not been enough to prevent our addition to the EU’s list on non-cooperative tax jurisdictions,” he said at a press conference with Minister of Finance Curtis Dickinson after the list was published.

“Bermuda is compliant and we are confident that within a
matter of weeks, that will be accepted by EU Member States and Bermuda will be
removed from this list. This confidence is shared by the UK Government who
through the Treasury specifically stated ‘that Bermuda has legislated to
address the issue identified‎. In light of this we expect Bermuda, and other
compliant jurisdictions, to be removed from the list at the next available
opportunity’.”

He further sought to assure Bermudians that government did
not anticipate any sanctions to be levied against the British Overseas
Territory.

“We will be pressing Bermuda’s case, emphasizing that fairness must be the order of the day. Our industry partners have commented on the paradox of our regulations being stricter than some of those countries that have not been listed. I believe that between now and May, a fair assessment of Bermuda’s legislation will confirm our compliance and we will be removed from the list,” Burt added.

For Barbados’
part, Minister of International Business and Industry Ronald Toppin said authorities
are working towards having the island removed from the blacklist. But he
stressed that Barbados’ actions remain transparent, as the country has already
been deemed compliant by the Organisation for Economic Co-operation and
Development (OECD), which is the globally recognized body for the setting and
monitoring of international tax standards.

The EU said that 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 European Commission and Member States (Code of Conduct Group) will continue to monitor the jurisdictions that have until the end of 2019/2020 to deliver, and assess whether any other countries should be included in the EU listing process; and the Commission will continue the open dialogue and engagement with the jurisdictions concerned, to provide technical support and clarifications whenever needed and to discuss any tax matters of mutual concern.

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