The Government of St. Kitts and Nevis has indicated that it is unswerving in its efforts to comply with the European Union (EU) anti tax avoidance measures and be removed from its blacklist which could result in trade sanctions against the Federation.

St. Kitts and Nevis was added to the European Union (EU) blacklist of non-cooperative jurisdictions for tax purposes along with Bahamas and the U.S. Virgin Islands.

Federation Financial Secretary Hillary Hazel explained the EU previously indicated that its determination of whether a country is cooperative for tax purposes would be based on three criteria including Tax Transparency, Fair Taxation and Implementation of anti-base erosion and profit shifting (BEPS) measures.

“In the case of St Kitts and Nevis, the only area of concern from the EU is in respect of: Fair Taxation where (a) a jurisdiction should have no preferential tax measures that could be regarded as harmful and (b) a jurisdiction should not facilitate offshore structures or arrangements aimed at attracting profits which do not reflect real economic activity in the jurisdiction.

Hazel explained that Saint Kitts and Nevis was cited for what the EU considers a “preferential tax regime” which refers mainly to the existing tax regime with respect to the provisions for offshore companies. “During the process of engaging with the EU, concrete commitments were made by the Federation to amend the relevant legislation to address the EU’s concerns.

“The Federation remains optimistic that these commitments will persuade EU’s partners to remove the Federation from the list of non cooperative jurisdictions for tax purposes and allow for a framework of cooperation and dialogue moving forward,” the Government official said.

She further added that the Federation does not consider itself to be non-cooperative. “On the contrary, the Federation remains committed to the international standards on transparency and exchange of information for tax purposes as evidenced by a Largely Compliant rating by the Organization for Economic Co-operation and Development (OECD).”

She continued, “Further, Saint Kitts and Nevis has continued to expand its exchange of information network and is a signatory to the Multilateral Convention on Mutual Administrative Assistance for Tax Matters (“the Convention”). St Kitts and Nevis signed and deposited the instrument of ratification for the Convention on August 25, 2016. Additionally, legislation was passed by the National Assembly in December 2016 to provide for the implementation of the CRS.”

Hazel added that St. Kitts and Nevis also joined the BEPS Inclusive Framework in November 2017 and is among 112 other jurisdictions that have committed to implementing anti-BPS measures. “Important members of the EU such as Italy, Greece, Poland and Estonia have also during the period 2016-2017 removed St. Kitts and Nevis from their national lists of non cooperative jurisdictions signifying their satisfaction with the Federation’s efforts on transparency and exchange of information.

“Based on the commitments given by Saint Kitts and Nevis to date, it is clear that Saint Kitts and Nevis is a committed and fully cooperative jurisdiction in the context of international tax transparency,” Hazel said.

She added that measures will be taken to address the EU’s current concerns within the stipulated time frame of 31 December 2018. “In this regard, Saint Kitts and Nevis will undertake a comprehensive review of its legislation with a view to addressing any deficiencies including amending relevant legislation in accordance with best practice in international tax matters.

She continued, “Consequently, the Government of Saint Kitts and Nevis will ensure that stakeholders within the Financial Services Sector and the wider general public will be consulted as we endeavour to maintain a strong and vibrant Financial Services Sector.”

But she didn’t address a controversial programme that the Federation and other Caribbean states have launched…Citizen by Investment schemes which can, in some cases, be used by wealthy people to dodge taxes in their native lands.

Prime Minister Dr. Timothy Harris , who is also the Minister of Finance, said the listing was a development for which the government is not culpable and has put forward a strong case to the EU for revisiting of the labelling “Our record will show that we have done excellently in that regard,.” Dr. Harris said.

He added that the listing does not necessarily mean that any country on the list has done anything wrong and there is no indication of such.

“What usually happens is that the EU uses its power and might to say they are concerned about a particular sector.

He said, “It is important to note that while they have the power to set standards for you the member states of the EU are not subjected to a similar evaluation.

The Blacklist is the EU acting for all its member states in a heavy handed form of blackmail telling Blacklisted countries that is they want to trade with Europe they must divulge names and accounts of EU citizens attempting to hide money in high interest offshore bank accounts.

Four Caribbean jurisdictions Barbados, Grenada, Saint Lucia and Trinidad and Tobago were named on the EU’s list of non-cooperative jurisdictions for tax purposes in December 2017. Barbados and Grenada were removed from the list in January 2018.