Dulcie James, FSC Commissioner
Commissioner of the Financial Services Commission Mrs. Dulcie James on Tuesday night this week was again speaking on the negative impact of being blacklisted as a tax haven by the European Union. In a presentation she told the audience that Montserrat was largely compliant with international standards. She also highlighted the legislation and agreements signed to comply with the exchange of tax information and transparency.
She cited among others, the Tax Information Act 2010 which Montserrat introduced in 2014 and the signing of a Tax Information Agreement with sixteen (16) countries, also in 2014, as well as the Multilateral Competent Agreement on Automatic Exchange of Financial Account Information. She shared the details of an OECD Global Forum statement confirming that Montserrat and the other 29 blacklisted jurisdictions are cooperative.
“Montserrat has done all in its powers to meet international standards and it is therefore regrettable that the EU Commission did not verify its members’ allegation that Montserrat is non-cooperative. The OECD, on the 19th of June 2015 stated: ‘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, not the EU and that a number of countries identified in the EU exercise are either fully or largely compliant and have committed to the automated exchange of information. The OECD continues to say, we are happy to confirm that these jurisdictions are cooperative.’ This statement is commendable, she said.
Despite this, the Financial Services Commissioner says, “However, it does not go far enough to lessen or mitigate the damage that the EU Commission’s publication has done.”
As reported before the OECS and CARICOM have both expressed their dissatisfaction with the state of affairs of the states of the region
Mrs. James complained that Montserrat, as an offshore centre, has very little offshore business. Currently, there are four (4) international banks (that’s offshore banks) and approximately fifteen (15) international business companies, sometimes just called IBCs for short. These are the non-resident in Montserrat that are licensed or registered within the jurisdiction.
She added that, ”although Montserrat has not sought in recent years to promote the jurisdiction as an offshore centre, the consequence of this naming of the jurisdiction as a non-cooperative damages the image of the island. It will be viewed as a country where there’s secrecy and where persons place their proceeds from illegal activity. It will dissuade good investors from choosing Montserrat as a low-cost in financial centre making it harder for the jurisdiction to promote and market the offshore centre. It also discourages some tourists from coming to Montserrat if they believe that Montserrat gives encouragement to persons who are trying to evade paying taxes in their own country.”
John Skerritt, Former GoM Financial Secretary
Meanwhile also speaking on the matter of the black listing of Montserrat and others in the region, recent Financial Secretary John Skerritt has criticized the decision of the European Union, who says the move was part of its crackdown on multinational companies trying to avoid paying tax with the Union. Mr John Skerritt believes that countries like Montserrat are treated unfairly.
Noting that it is an expensive exercise for Montserrat, he explains: “According to the framework, it outlines a set of criteria by which a country is assessed. If you meet them then you are moved off the list. If you do not meet them then you go on the list. But what it appears at this particular point in time that there are a number of countries that have met most of the criteria—even though a lot of the transactions, the jurisdictions are too small, they still happen. The transactions themselves still happen in the developed world through their markets because they have a developed financial system. But these are the countries that are listed even though they have gone through a lot of expense, they are a set of frameworks which are inefficient because of the size of the financial services that operate within the countries and unfairly you put all of these things into force and then they totally disregard it and you are blacklisted and your reputation suffers, the economy suffers and at the end of the day, they say they have aid fatigue which means that they kill your economy and still not going to help you.”
According to Mrs. James says the United Kingdom has asked for the list to be updated in order to reflect the true situation with regards to member states’ list. The UK also continues to encourage or engage with the European Union Commission on how information on tax transparency can be best presented in the context of those lists.
CARICOM speaks out
At the Caribbean Community (CARICOM) leaders gathering for the annual summit where they discussed recurrent issues ranging from the impact of the ongoing global economic crisis to climate change dominating the three day event, the EU blacklisting matter featured.
The decision by the European Union to blacklist a number of Caribbean countries, referring to them as “tax havens” has already brought regional countries closer together, despite latest efforts by the head of the Delegation of the European Union to Barbados and the Eastern Caribbean, Ambassador Mikael Barfod, to downplay the matter.
Barfod has told the 13 Caribbean countries that the decision to release the list of international tax havens should not be regarded as an attempt to blacklist any country.
He said “the criteria may not be blacklisting, in a traditional sense, as it is very often perceived.
“It could even show what a specific EU member state believes are low tax rates or a harmful tax regime…that is something that these countries need to find out,” he added.
But Antigua and Barbuda Prime Minister Gaston Browne, whose country is among the 13 Caribbean nations listed by Europe, said the list is flawed and even baffling given that the official regulators, including the Global Forum, in Europe had found the Caribbean countries to be very compliant.
“There was no prior warning, and we note too that the countries in Europe with whom we have significant trade relations, the United Kingdom as an example, Germany, France, they did not make any such assessment.
“However there are some other countries with whom we have little relations and I believe too they have little knowledge of the Caribbean, they have deemed us to be uncooperative …and they have also classified us as tax havens.
“But the issue is whether or not they have any such locus and we are of the view that they do not have any such locus,” Browne said, adding “clearly these justifications are not only unjust, these countries have no locus to make any such classification”.
