BRIDGETOWN, Barbados, June 19, 2015 (AMG) — Doubts have been cast over the methodology and motives behind the naming of fourteen Caribbean countries among a list of thirty territories blacklisted by the European Commission as the world’s worst tax havens.

The list, published on Wednesday, cited Antigua and Barbuda, The Bahamas, Barbados, Belize, Bermuda, Grenada, St. Vincent and the Grenadines, St. Kitts & Nevis, Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Montserrat and the Turks and Caicos Islands as being deficient in cracking down on tax avoidance.

European tax-avoidance hubs such as Luxembourg – whose former Prime Minister is now the President of the European Commission – were excluded, as were the Netherlands and Ireland, all of which are being investigated by European competition authorities for allegedly offering “sweetheart” tax deals to multinational companies. But the Commission, responding to queries on the omission of EU jurisdictions from the list, said that the blacklist was designed only to assess non-EU members. 

Concerns raised: Each country on the blacklist had been suggested by at least ten other EU member states but, notably, neither the United Kingdom nor Germany made any suggestions.

In a statement issued to the press, Sir Ronald Sanders – a former ambassador for Antigua and Barbuda who led negotiations with the Organisation for Economic Cooperation and Development (OECD) on its “Harmful Tax Competition” scheme, said:

In naming 30 countries as the “top tax havens in the world”, the European Union (EU) appears to “playing dice” with the reputations of countries, 12 of which are Commonwealth independent small states in the Caribbean, the Pacific and the Indian Ocean.

An examination of how Antigua and Barbuda, the Bahamas, Barbados, Belize, Grenada, St Vincent and the Grenadines and St Kitts-Nevis were listed reveals that in all cases 10 European countries were mainly responsible for naming them.  

But, very little business is done between these 7 Caribbean countries and the 10 European nations, namely Bulgaria, Croatia, Estonia, Greece, Italy, Latvia, Lithuania, Poland, Portugal and Spain. 

If the seven independent Caribbean countries named above were seriously deficient in the application of international standards of tax good governance (transparency, exchange of information, and fair tax competition), this would have been known to Britain with whom these countries conduct more business than any other European nation.   Yet, neither Britain nor Germany are among the EU countries who identified them.

It may well be that the named countries in the Caribbean, Pacific and the Indian Ocean do not have Tax Information Exchange Agreements with the 10 European Union nations, but they do have such agreements in place with major EU nations.  Why then was there not more information sharing between the EU countries before the list was issued in the name of the EU as a whole?

Small Commonwealth states should act together to object to their listing by the EU and to question the criteria by which the 10 European nations with which they least do business identified them as tax havens.

EU response: For its part, the European Commission is contending that its list will push territories to adopt international standards. European Commissioner for economics, taxation and customs, Pierre Moscovici told the media: “Our citizens can no longer tolerate that certain companies, often the most prosperous, avoid fair tax contributions, and that certain tax regimes encourage them on this path.”

The publication of the blacklist coincides with the European Commission’s relaunch of the Common Consolidated Corporate Tax Base (CCTB) scheme, which – among other things – will tax profits of companies parked in low or no tax jurisdictions.

Image credit: Glyn Lowe Photoworks

Caribbean states urged to object to EU tax-haven blacklisting

Antillean Media Group

Working with Caribbean media partners, we go behind the news to deliver impartial, evidence-based reports on issues that impact residents, governments and investors in over 21 Caribbean territories.

PUBLISHED — June 19, 2015

Category: BusinessCARICOM & Foreign Policy