taxes. Some countries do not maintain public beneficial ownership registers. Some do not keep any record of beneficial ownership or company accounts v. This is seen as a significant lack of transparency.
The Panama Papers, released by the International Consortium of Investigative Journalists( ICIJ) which exposed over 214,000 offshore entities more than half of which were registered in the British Virgin Islands and the recent leak of offshore files on 175,000 entities registered in the Bahamas adds fuel to the perception that the region is shrouded in misconduct vi. More often than not, mishaps occurring in one or two countries result in the entire region being branded as“ Tax Havens”.
“ There is no Caribbean country
listed in the Top 20 of the Tax Justice Network’ s financial secrecy index ranking list … the top 20 positions include 7 OECD countries, including the USA.
”
The Reality: While a few countries have been targeted by the largest economies, let us examine the reality of regional compliance.
• According to the latest FATF follow up reports, most Caribbean jurisdictions are largely compliant with the FATF Key and Core recommendations. Many jurisdictions have put the necessary structures in place for FATCA reporting with nine( 9 / 18) countries having International Governmental Agreements( IGA’ s) in force, four have signed the IGAs but have not passed the respective legislation and five have agreed in substance but have not completed the other stages vii.
• With regard to Common Reporting Standards( CRS), nine jurisdictions are early adopters and will begin CRS reporting in 2017 while nine are preparing for reporting in 2018 viii.
• The latest OECD GF on Tax Transparency Review report indicates that most Caribbean countries have completed Phase 1 and are undergoing Phase 2 reviews ix.
• It is noteworthy that, with the exception of the Cayman Islands, there is no Caribbean country listed in the top twenty of the Tax Justice Network’ s financial secrecy index ranking list. However, the top twenty positions include seven OECD countries, among which is the USA.
These facts clearly show that the majority of our countries are compliant and have taken the necessary steps for tax transparency requirements.
Blacklisting: Despite this, there have been multiple instances of“ blacklisting” Caribbean countries as“ Tax Havens”. For example, on 17 th June 2015 the EU blacklisted 15 Caribbean countries in their“ Action Plan for Fair and Efficient Corporate Taxation in the EU”. The methodology used to make that determination was regarded as grossly flawed as it relied on the assessments by some countries which had no relations or dealings with some of the countries which were blacklisted.
In addition, the blacklisting by the EU was contrary to the assessment of the OECD, which stated that a number of the countries listed on the blacklist were fully or largely compliant and were committed to the Automatic Exchange of Information( AOEI) x. The OECD’ s Secretary General, Angel Gurria also stated that there was nothing more that the countries could do in order to be considered cooperative xi. In 2015 the District of Columbia listed 15 Caribbean countries as“ tax havens” in their DC 2015 Budget Support Act. Fortunately due to the strong stance taken by Caribbean countries as well as the CAB and other stakeholders the listing was removed.
The Bahamas Case: More recently, in relation to the Common Reporting Standards( CRS), a recent article by The Economist on September 10 th, 2016 garnered significant attention by stating that the Bahamas was deliberately opting for a“ go-slow” approach on tax transparency by pursuing bilateral agreements on automatic information exchanges( AOEI) as opposed to multilateral arrangements xii.
The Bahamas, however refuted this position claiming the article to be untrue and merely an attempt to paint the Bahamas in an unfair light. According to the Minister of Financial Services, the OECD provided the Bahamas with a choice of either a multilateral agreement or a bilateral approach. The Bahamas went bilateral because it better suited their tax regime. They reiterated that they have committed to CRS, even as early adopters xiii.
“
EU blacklisted 15 The Caribbean countries in
their“ Action Plan for Fair and Efficient Corporate Taxation in the EU”. The methodology used to make that determination was regarded as grossly flawed...
”
Negative Consequences: Given the foregoing scenarios, one can deduce that there is a measure of bias in the perception of the Caribbean as a Tax Haven.
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