Jersey and Guernsey have escaped being named on the EU’s new tax blacklist of jurisdictions which don’t meet transparency and regulatory standards.
Of the 92 places they investigated, the European Union placed 17 on their blacklist, but put a further 47 on a so-called grey list meaning there’s more work to do. The Channel Islands appeared on that list because of concerns they allow companies to set up to make a profit without any apparent economic activity.
We’ve been gathering a range of reaction from politicians, industry, tax campaigners and the European Union.
Political reaction…
Jersey’s Chief Minister Senator Ian Gorst acknowledged there was still work to do. He said: “I am pleased that Jersey has been rightly acknowledged for its cooperation in international tax transparency and compliance with BEPS requirements. We have committed to working with the Code Group on their concerns over economic substance and they have fully accepted that commitment. I look forward to entering into substantive dialogue in the New Year.”
“Our discussions may include creating enhanced reporting obligations or changes to our legislation on economic substance. We have already begun the necessary preparations, having regard to the Code Group requirements and Jersey’s best interests. I am committed to ensuring that, working with the finance industry, this process will be completed by the end of 2018.”
While his Guernsey counterpart, Deputy Gavin St Pier, said: “Guernsey is choosing to continue to meet EU tax good governance standards. This means that there should be no reason for the EU to have concerns over Guernsey as a location into which the European Investment Fund can continue to comfortably invest, nor to have any tax related concerns when considering our access to the EU market in the future on the basis of equivalence, when provided for in EU legislation.”
“We therefore also hope too that the Commission will soon grant the AIFMD third country passport which the European Securities and Markets Authority has recommended. Guernsey has demonstrated that it is possible to balance transparency with privacy, and economic substance with competitiveness. We will maintain that approach.”
Finance industry reaction…
Guernsey Finance Chief Executive Dominic Wheatley said: “We are committed to the highest international standards of compliance, tax transparency and neutrality, and were always confident in the outcome of this process. Guernsey’s stability is supported by the fact that it is self-governing and self-funding and has demonstrated world-class financial expertise for more than 50 years as an international finance centre.”
“Our industry offers the quality of advice, governance, regulation, and administration that is consistent with a jurisdiction of real substance and value generation.”
Tax campaigners reaction…
Alex Cobham, chief executive of the Tax Justice Network, said: “Rather than have a list of tax havens based on an objective set of criteria, as originally envisaged, the list appears to be a political fix with EU members picking their least favourite countries to name and shame. The result of the flawed blacklisting process is a politically led list, that includes only the economically weak and politically unconnected.”
“While the UK has sought to frustrate the blacklisting of its Crown Dependencies and Overseas Territories at every turn, the list is hard to take seriously. The public has had enough of governments saying they will do better. Real action is needed. It is completely pointless to have a blacklist with no sanctions. Tax avoiders, and the countries that sponsor them will all be letting out a sigh of relief.”
Meanwhile, the charity Oxfam, who last week highlighted countries it believed deserved to be named and shamed for their unfair tax practises, shared that sentiment.
Oli Pearce, Oxfam GB’s policy advisor on inequality and tax, said: “It is disturbing to see mostly small countries on the EU blacklist, while the most notorious tax havens, UK-linked places like Bermuda, the Cayman Islands, Jersey and the Virgin Islands, escape with a place on the grey list.”
“Although we recognise this is a step in the right direction, if EU leaders let too many tax havens off the hook we’ll all lose out. Tax dodging means less money available for healthcare, education and the fight against poverty and it is poor countries that lose out the most. A place on the grey list must not mean tax havens get off scot- free.”
European Union reaction…
The EU’s Economic and Financial Affairs Council is headed by Commissioner Pierre Moscovici. He said: “I call on EU finance ministers to avoid any naivety. Countries that have committed to change their tax laws must do so as soon as possible. The publication of the list and the commitments is a first victory for transparency. I pushed hard for this and I welcome it.”
The jurisdictions named on the EU’s blacklist are: American Samoa, Bahrain, Barbados, Grenada, Guam, Republic of Korea, Macao SAR, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia, and United Arab Emirates.
