CASTRIES, St. Lucia, Mar 23, CMC – The St. Lucia-based The Caribbean Association of Banks Inc. (CAB) is calling on regional governments to “carefully assess the deficiencies” identified by the European Union for the reasons behind its decision to rate a number of Caribbean Community (CARICOM) countries as tax havens.
In a statement, the CAB said that it is “deeply concerned” at the recent inclusion of Caribbean territories on the European Union Commission’s (EU) list of non-cooperative jurisdictions for tax purposes.
It said the list names countries which have not displayed sufficient commitment to the tax standards identified by the EU.
The EU finance ministers earlier this month named the Bahamas as well as U.S. Virgin Islands to its blacklist of tax havens, saying they had also decided to remove Bahrain, the Marshall Islands and St. Lucia, from an earlier list that had also included American Samoa, Guam, Namibia, Palau, Samoa and Trinidad and Tobago. The EU had earlier removed Barbados and Grenada from the list.
The EU finance ministers have also decided to add Anguilla, the British Virgin Islands, Dominica and Antigua and Barbuda to a so-called grey list of jurisdictions which do not respect EU anti-tax avoidance standards but have committed to change their practices.
The blacklist was set up in December, but Caribbean islands hit by hurricanes last year were given more time to adapt their tax practices to EU requests.
Earlier this month, the Caribbean Community (CARICOM) leaders who met in Haiti for the 29th inter-sessional summit, called on their finance ministers and central bank governors of the region to meet “expeditiously” to consider new proposals as regional governments continue to react to decisions by Europe in listing some countries as tax havens.
In its statement, the CAB said that blacklisting has debilitating effects on Caribbean economies, specifically since it “exacerbates the perception of our region as ‘high risk’ and consequently, negatively affects; the risk profile of regional financial institutions and the willingness of correspondent banks to do business with them 9and) It severely reduces critically-needed development funding from the EU and limits the ability of Caribbean territories to pursue their development goals”.
The CAB said in addition, blacklisting “makes the region vulnerable to future sanctions and financial penalties, which may be levied against “blacklisted” jurisdictions”.
It said removal from the blacklist requires a high-level political commitment from the affected jurisdictions to address the deficiencies identified by the EU’s Code of Conduct Group.
The CAB said that EU has given the countries specific time-frames to make high level commitments to address the deficiencies identified by the Code of Conduct group.
It said some of the deficiencies identified in the various Caribbean jurisdictions include existence of harmful and preferential tax regimes; non-application of base erosion and profit sharing (BEPS) minimum standards, tax avoidance strategies which seek to artificially shift profits to low/no tax jurisdictions.
It said the deficiencies also include the non-commitment to signing and ratifying the Convention of Mutual Administrative Assistance -Tax information exchange agreements to fight international tax evasion.
CAB said that while it recognizes the efforts of regional governments so far towards compliance with the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes Standards,” nonetheless, the very challenging issue of harmful and preferential tax regimes needs to be addressed”.
As a result is calling on “all regional governments concerned, to carefully assess the deficiencies identified by the EU and take the necessary actions to ensure compliance with Global Standards in order to avoid further reputational risk/damage to the region”
In addition it said it “strongly recommends continued collaboration and coordination among CARICOM governments so as to take appropriate measures on key issues which can impact the financial services sector as well as the growth and development of regional economies”.