St. Kitts and Nevis is among 8 Caribbean nations placed on a blacklist By France and branded as uncooperative offshore financial centres, a move Prime Minister Dr. Denzil Douglas referred to as “premature”. Belize, Anguilla, Dominica, Grenada, Montserrat, St. Lucia, and St. Vincent and the Grenadines also made the 18-country offshore blacklist. News of the blacklist broke on February 16th following the procurement of an official document pertaining to the issue which was reportedly dated February 12th and signed By French Economy Minister Christine Lagarde and Budget Minister Eric Woerth. Dr. Douglas briefly addressed the issue on Wednesday during his first press conference since taking office following his St. Kitts-Nevis Labour Party’s win at the January 25th general elections. “I want to emphasize that we have been advised that France has placed 8 Caribbean countries on a tax haven restricted list. I should emphasize that so far St. Kitts and Nevis has already signed 9 different agreements with OECD countries, we had also initialed another 11 and there are 6 more of these countries that are waiting to be dealt with By us. In fact we expected that By March of this year we would have me the basic requirements to be removed from the OECD Grey List as it is called,” he informed. PM Douglas joins Montserrat and Grenada government officials who have expressed surprise at being included on the list and have spoken out against the move By France. “We think that France has acted out of turn and has acted prematurely against the commitment that was made with the OECD countries that March would have been the deadline for any punitive action to be taken,” the Honorable Prime Minister said. In 2009 St. Kitts and Nevis was amongst several Caribbean countries ‘grey listed’ By the Organisation for Economic Cooperation and Development as not meeting international standards as it related to the taxes imposed on foreign companies setting up shop in their respective countries. These grey listed countries were required to take certain measures to avoid being blacklisted including signing a number of new Tax Information Exchange Agreements. According to officials from some of the now blacklisted countries, the ratification deadline given By France was indeed March 2010.Last year the French government passed a law that domestic companies that have any established commercial connections with the 18 countries on the tax haven black list would see a 50% tax imposed on dividends, interests, royalties and service fees paid By domestic firms to companies operating in those countries. This law will take effect March 1 and replace the previous taxation of 15%. With the majority of Caribbean territories transitioning their economies towards a concentration on the financial services industry, being blacklisted could be detrimental to their already fragile economies. The Nevis local government recently announced its intention to endeavor to position the country as “a major player in the Financial Services Industry”. The blacklisted Caribbean territories could ill afford to risk losing business from OECD countries which include most of those regarded globally as financial goliaths. Revenue earned through conducting business with these OECD countries accounts for a substantial portion of the smaller countries’ annual foreign exchange income. The OECD, which helps to develop policy frameworks for the governance of the world economy, identifies three key factors in considering whether a jurisdiction is a tax haven- imposing nil or only nominal taxes and offering themselves, or are perceived as offering themselves, as a place to be used By non-residents to escape high taxes in their country of residence; protection of personal financial information through laws or administrative practices under which businesses and individuals can benefit from protections against scrutiny By foreign tax authorities which prevents the transmittance of information about taxpayers who are benefiting from the low tax jurisdiction; and a lack of transparency in the operation of the legislative, legal or administrative provisions. The Prime Minister vowed to issue a full statement on the matter shortly.
France Blacklists SKN as Offshore Tax Haven By Sheena Brooks
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