BASSETERRE, St. Kitts – THE Caribbean Community (CARICOM) has described statements provided by the European Union Council to support the inclusion of member states on the Blacklist as “grossly misleading and misrepresenting the response, in good faith of its members”.
Earlier in March, the EU released an updated Blacklist that included Barbados, Belize Dominica, Trinidad and Tobago and Bermuda, describing them as “non-cooperative tax jurisdictions”.
A statement from the regional body said the renewed attack on member states’ economic prospects constitutes an infringement of the sovereign right of self-determination in the best interests of the CARICOM people.
CARICOM said, “We are concerned that the EU’s ‘tax good governance strategy’ is beginning to border on anti-competitive behavior targeted at the decimation of the international business/financial services sector in the Caribbean”.
According to the CARICOM statement, the EU Council stated that Barbados “has replaced a harmful preferential tax regime by a measure of similar effect and did not commit to amend or abolish it by the end of 2019’.
Barbados however undertook a review of its corporate tax regime in 2018 and decided to pursue tax convergence, which removed the alleged ‘preference’ accorded the international business sector.
That island now applies a tax rate of 1% to 5.5% on the taxable income of all corporations registered in that jurisdiction.
“This policy has been sanctioned by the OECD…which has reiterated that a low tax rate does not, in itself, constitute a harmful tax regime. Moreover, Barbados requested clarification on the areas of divergence in the requirements for a ‘low tax jurisdiction’ as established by the OECD Forum on Harmful Tax Practices (FHTP) and the EU’s ‘fair taxation criterion’. However, the EU only responded to Barbados’ request on the day after the issuance of the revised Blacklist,” CARICOM said.
CARICOM noted that in the cases of Belize and Bermuda represent departure from the practice of placing jurisdictions on the grey list (Annex II) for purposes of monitoring.
“The EU Council has asserted that Belize ‘has not yet amended or abolished one harmful preferential tax regime’ notwithstanding the legislative, administrative and tax reforms undertaken by 31 December 2018 which were sanctioned by the OECD.”
In the case of Dominica, CARICOM highlighted the insensitivity of the EU Council to a country devastated by two natural disasters in 2015 and 2017.
“Yet despite this, the country completed all the required legislative and administrative reforms to which the government had committed in mid-2018 to undertake. Notwithstanding, Dominica has been included in the revised Blacklist because the jurisdiction ‘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.’”
Similar sentiments were echoed by Nevis' Premier Mark Brantley at his March Press Conference, where he lashed out at officials for their stance on Dominica.
Brantley noted that the Federation is feeling the effects of the continued legislative changes required by the OECD and the European Union.
In a speech to open an Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) meeting on Nevis, he opined that the actions taken by the OECD and the EU are offending the independence of regional states.
“The EU has gone further than the OECD in its compliance demands, and it’s blacklisting of CARICOM Member States offends the very principles of self-reliance and mobilisation of domestic resources recommended by the United Nations Addis Ababa Action Agenda (AAAA). The EU’s joint and several approaches to what they have unilaterally defined as ‘tax good governance’ fall only a very little short of interference and disregard for the sovereignty of the States they deem non-co-operative.”
The Premier reminds that the financial services sector is an essential pillar of St. Kitts and Nevis economy.
To this end, he said it should not be taken lightly or could they afford to overlook any measures that would ensure its sustainability.
