GEORGETOWN, Guyana – On March 12, 2019, the European Union (EU) issued a revised list of countries purportedly not adhering to tax good governance, which included five members of the Caribbean Community (CARICOM), Barbados, Belize, Dominica, Trinidad and Tobago and Bermuda.

Seven other members of the community have been placed on a monitoring list having made commitments to undertake reforms by December 2019 and are making efforts in that regard. These are Antigua and Barbuda, The Bahamas, St Kitts and Nevis, Saint Lucia, Anguilla, British Virgin Islands and the Cayman Islands.

The narrative provided by the EU council to support the inclusion of the blacklisted states is grossly misleading and misrepresents the response, in good faith, of our members since the initial listing in December 2017.

This renewed attack on our member states’ economic prospects constitutes an infringement of our sovereign right of self-determination in the best interests of the CARICOM people. Moreover, we are concerned that the EU’s ‘tax good governance strategy’ is beginning to border on anti-competitive behaviour targeted at the decimation of the international business/financial services sector in the Caribbean.

The EU council has 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.’” However, Barbados 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. Barbados now applies a tax rate of 1 percent to 5.5 percent on the taxable income of all corporations registered in that jurisdiction.

This policy has been sanctioned by the OECD, as the recognised global authority on tax governance, which has reiterated that a low tax rate does not constitute a brutal 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.

The case of Belize and Bermuda represents a clear departure from the practice of placing jurisdictions on the grey list (Annex II) for purposes of monitoring once they have given high-level commitments to address alleged ‘deficiencies.’

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 December 31, 2018 which were sanctioned by the OECD. The EU has also asserted that Belize has introduced a ‘new and preferential tax measure’ in its 2018 tax reforms.

However, Belize contends that the referenced tax rates of 1.75 percent to 3.35 percent on taxable income of international business companies and entities operating in Belize’s designated processing areas are consistent with Belize’s actual income and business tax regime. Nonetheless, Belize acquiesced and provided, as demanded by the EU, an undertaking to amend this so-called ‘new preferential tax measure’ by December 31, 2019.

Despite Belize’s commitment to amend or abolish the “newly identified harmful preferential tax regime by the end of 2019,” which the EU stated it would monitor, as well as an additional high-level political and time-bound commitment to address any other concerns of the EU, Belize was included on the March 12 blacklist.

Bermuda’s inclusion on this list is as a result of an omission which was remedied after the revised commitment date.

The case of Dominica highlights the insensitivity of the EU council to a country that was devastated by two natural disasters in 2015 and 2017 and lost its largest investor. 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.”

However, the signature of the multilateral convention is dependent on the sanctioning of the request for admittance and a determination of readiness by the OECD and totally outside the control of Dominica.

Trinidad and Tobago is in the unique circumstance where the government lacks the parliamentary majority under the country’s constitution to undertake the legislative reforms required to comply with the tax good governance standards. Despite this circumstance, the EU has retained Trinidad and Tobago on the blacklist for having a “’noncompliant’ rating by the Global Forum on Transparency and Exchange of Information for Tax Purposes for Exchange of Information on Request.”

The Caribbean community reiterates that the labelling as ‘non-cooperative tax jurisdictions’ has wreaked irreparable reputational damage on our small, highly vulnerable member states. CARICOM member states have acted in good faith to mitigate this egregious action by the European Union while upholding the shared values and principles underlying the United Nations Addis Ababa Action Agenda. These principles emphasise, among other things, shared responsibility, mutual accountability, fairness, solidarity, and different and evolving capacities concerning the mobilisation of resources to achieve the 2030 Agenda for Sustainable Development.

However, the process of engagement which has unfolded between the CARICOM member states and the European Union, specifically from the latter part of 2017 until the present, has regrettably, been devoid of the shared values that have informed our relationship over the years prior. There is a clear regression to the days of metropolitan imposed policies on the governed.

The ECOFIN council’s allegation of ‘harmful tax regimes’ not only lacked any supporting empirical evidence, but the process has been non-consultative, inflexible and insensitive to our circumstances as small, highly vulnerable States seeking to build both economic and climate resilience. Moreover, the EU has selectively relied on the OECD tax governance process to pursue the blacklisting of jurisdictions like Dominica and Trinidad and Tobago while ignoring the conclusions of the OECD FHTP in respect to the tax regimes in Barbados and Belize.

It is becoming apparent that the actions of the ECOFIN council are designed to destroy the financial sector in our member states even as we seek to build resilience in all our economic areas to mitigate our inherent vulnerabilities. The Caribbean community deplores this injurious development and will continue to resist this retrograde approach by the EU.

Font : https://www.caribbeannewsnow.com/2019/03/29/caricom-issues-statement-on-revised-eu-blacklist-of-members-of-the-community/

BRUSSELS (Reuters) – European Union governments adopted a broadened blacklist of tax havens on Tuesday, adding the United Arab Emirates and British and Dutch overseas territories in a revamp that tripled the number of listed jurisdictions.

The 28-nation EU set up the blacklist in December 2017 after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills.

EU finance ministers added 10 jurisdictions to the updated list. They are: the Dutch Caribbean island of Aruba, Barbados, Belize, the British overseas territory of Bermuda, Fiji, the Marshall Islands, Oman, the United Arab Emirates, Vanuatu and Dominica.

They join Samoa, Trinidad and Tobago, and three U.S. territories of American Samoa, Guam, and the U.S. Virgin Islands who were already on the blacklist.

Blacklisted states face reputational damages and stricter controls on transactions with the EU, although no sanctions have yet been agreed by EU states.

Jurisdictions are blacklisted if they have shortfalls in their tax rules that could favor tax evasion in other states. Those who commit to change the rules by a set deadline are removed from the list.

Bermuda Premier David Burt said in a statement that the island was compliant with EU standards and feared no damage to its reputation.

The UAE said it regrets the EU’s decision and that it has shared with the bloc a detailed plan of the action it is currently implementing, state news agency WAM reported.

“This inclusion was made despite the UAE’s close cooperation with the EU on this issue and ongoing efforts to fulfill all the EU’s requirements,” WAM said.

“The UAE remains firmly committed to its long-standing policy of meeting the highest international standards on taxation, including the OECD’s requirements, and will continue to update its domestic legislative framework in this regard.”

Most of the so-called non-cooperative jurisdictions on tax matters are small Caribbean and Pacific islands, which rely on tourism and off-shore arrangements that supporters consider crucial for global finance.

They were given about a year to change tax rules, but have so far not done so, EU officials said.

EU tax commissioner Pierre Moscovici said the listing process was a great success because it had pushed dozens of countries to abolish “harmful tax regimes”.

PRESSURE

Tuesday’s decision came despite opposition by some EU states to some listings.

Just before ministers met on Tuesday, the chair of the meeting, Romanian Finance Minister Eugen Teodorovici, told reporters he expected the decision to be delayed to May, surprising many EU officials who believed a deal was close.

Decisions on tax matters require the backing of all the 28 EU member states.

Pressure from the United States, Saudi Arabia and Panama prompted EU governments to block last week another blacklist of countries that show deficiencies in countering money laundering and terrorism financing.

EU documents seen by Reuters show that Italy and Estonia objected to the new tax haven list, as they opposed the inclusion of the United Arab Emirates. [nL8N20Y24W]

Romanian Finance Minister Eugen Teodorovici holds a news conference after an European Union finance ministers meeting in Brussels, Belgium March 12, 2019. REUTERS/Francois Lenoir

But Italy’s objections fell away on Tuesday as Rome obtained guarantees that the UAE would be removed from the list once it adopted legislation that would make it compliant with EU tax standards.

Last week Britain lifted its veto on the listing of its overseas territory of Bermuda, the documents show.

The Netherlands also declined to use their veto over Aruba.

The EU blacklist originally comprised 17 jurisdictions, including the UAE, but shrank to five after most listed states committed to change their tax rules.

Font:  https://www.reuters.com/article/us-eu-tax-blacklist/eu-adopts-new-tax-haven-blacklist-adds-uae-bermuda-aruba-idUSKBN1QT1Q9?il=0

Oregon’s offshore tax system faces a potential overhaul in the Legislature, one year after lawmakers repealed the state’s five-year old tax haven legislation.

The debate is about Oregon’s role in the global marketplace and its need to collect taxes from corporations with interests outside the U.S.

Lawmaker actions from 2018 will get scrutiny in the debate, too.

Tax reform advocates say Oregon lawmakers moved too quickly when they repealed the state’s tax haven law. That law rerouted the Oregon-earned income of companies based offshore for tax collection purposes.

Oregon’s former tax haven law was a blacklist: It targeted and named countries, like the Cayman Islands, San Marino and the Cook Islands.

Source :https://eu.statesmanjournal.com/story/news/politics/2019/02/02/oregon-offshore-tax-laws-scrutiny-legislature-loophole-economy/2683410002/

 

There are been many changes in the Belize IBC, Trusts and Foundations legislation in the past few years, on 2019 new provision will be in force :

1. All IBCs must provide a Register of Director, Beneficial Owner and Shareholder. Please see attached the changes in the legislation regarding these requirements. Amendment to the Leglislation 2017 and S.I. 63

2. All Belize Structures must provide a Beneficial Owner Declaration. Kindly see attached the legislation S.I. 62. This document must be provide by June, 2019. Owner’s Declaration to be completed is attached.

3. This December, the Belize Parliament has passed some changes to the International Business Act, which will take effect on 1st January 2019. There will be a number of grandfathering provisions for existing Belize companies, which Tarovision will naturally share with our clients, but before we do so, there are a series of clarifications that our corrispondents are sorting out with the Belize Regulator to ensure the certainty of the law.

The Circular dated 2/11/2018 revised the definition of “shell companies” as the following :

Definition of Shell Companies:

The term “shell company/entity” refers to a limited liability company or any other legal/business entity that bears the following characteristics:

  1.  It has no physical presence or operations in its country of incorporation/registration (other than a mailing address);                                      Physical presence of a company/entity is construed as having a place of business or operations (own or rented premises) in the country of registration/incorporation.Also, absence of meaningful mind and management could be construed as lack of physical presence.The presence of a third person providing merely nominee services including company secretary duties does not constitute on its own physical presence and
  2. It has no established economic activity in its country of incorporation/registration, little to no independent economic value and no documentary proof to the contrary.

Exceptions:

  1. the company/entity is established for the purpose of holding stock or shares or other equity instruments of another business entity or entities engaged in legitimate business with identifiable ultimate beneficial owner(s);
  2. the company/entity is established for the purpose of holding intangible or other assets including real estate, ship, aircraft, portfolio of investments, debt and financial instruments;
  3. the company/entity is established to facilitate currency trades and asset transfers, corporate mergers as well as carrying out asset management activities and trading of shares;
  4. the company/entity acts as a treasurer for companies recognized as a group or manages the activities of the group;
  5. any other case where convincing evidence can be provided that the company/entity is engaged in legitimate business, with identifiable ultimate beneficial owner(s).

 

if an entity falls within the above exceptions but

  1. it is registered in a jurisdiction where companies/entities are not required to submit to the authorities independently audited financial statements and does not voluntarily prepare audited financial statements by independent qualified professional accountants who are licensed or regulated and/or
  2. it has a tax residence in a jurisdiction included in the EU list of non-cooperative jurisdictions for tax purposes or the OECD’s list of non-cooperative jurisdictions for tax purposes or has no tax residence whatsoever,

 

then business relationships (i.e. banking) with such an entity shall be avoided.

In the last 24 April 2018, the Swiss federal government’s discussed about the recommendations OECD Global Transparency Forum of July 2016. This proposed the compulsory conversion of bearer shares into registered shares.

Bernhard Loetscher and Flavia Widmer of CMS von Erlach Poncet said ‘The abolition of bearer shares is not a measure necessary to align with international standards’ and ‘The rules on transparency of legal entities enacted in 2015, which confirmed the feasibility of bearer shares, were at the time recognised as compliant with the FATF’s respective recommendations. Moreover, those rules have proven to be effective.’

This consultation is open until 21 September 2018.

The US has listed as Cyprus as a ‘country of primary concern’ with regard to money laundering across the world. A 2015 report by the US State Department noted that Cyprus was used primarily as an intermediary by criminals seeking to launder money.

Under the pressure of the US the Central Bank of Cyprus (CBC) has issued a statement where instructed all banking institutions not to open new bank accounts, or renew existing ones with companies that are regarded as “shell” or “letter box” companies.

The announcement states that all trading companies that have no substance (effective place of business and management) will not be permitted to maintain bank accounts in Cyprus. including the trading companies incorporated in “tax havens”.

The Ordinance 2018 (“the Amendment Ordinance”) introduced new requirements on the keeping of significant controllers registers by the Hong Kong companies.

From 1 March 2018 all incorporated company (except listed companies) in Hong Kong must identify people or entities that have significant control over the company and to maintain a significant controllers register (SCR).The register will accessible to Hong Kong authorities.

From 1 July 2017 certain British Virgin Islands companies will be required to identify and collect details of the individuals who ultimately own or control 25% or more of the shares or voting rights or who otherwise exercise control over the management of the company, thenew legislation implement a networked database of beneficial ownership interests in companies incorporated or domiciled in the jurisdiction.

The database, known domestically as the Beneficial Ownership Secure Search (BOSS) System, is being rolled out so that the BVI can comply with its obligations under the Exchange of Notes agreement entered into with the UK in April 2016 (UK Exchange of Notes). The UK Exchange of Notes modernises the way in which the BVI competent authorities may gain access to beneficial ownership information of BVI companies.