Gov’T, Private Sector Slam Eu ‘Blacklisting’


Tribune Business Editor


The Government and private sector have slammed as “highly disappointing” the European Union’s (EU) decision to ‘blacklist’ this nation’s financial services industry, arguing that the move has no merit.

Aliya Allen, the Bahamas Financial Services Board’s chief executive, told Tribune Business in a statement that the EU action was inconsistent with the Bahamas’ “co-operation” in meeting global ‘tax transparency’ standards.

“Given the full co-operation of many countries like the Bahamas on tax transparency it is highly disappointing that these types of blacklists exist today,” Ms Allen said.

“The Bahamas has moved, in line with the rest of the world, to adopt the OECD Standard on the Automatic Exchange of Information.”

She added that the EU also seemed to have disregarded OECD and Caribbean Financial Action Task Force (CFATF) assessments of the Bahamas, which found this nation largely compliant with existing tax information and exchange and transparency standards.

“The Bahamas is white-listed by the OECD, and its fourth round mutual evaluation indicated that it was either wholly compliant or largely compliant with the criteria on tax information exchange,” Ms Allen said, criticizing the criteria employed by the EU to ‘blacklist’ the Bahamas.

“We believe this type of a clearly consolidated list means nothing if it fails to take into account the assessments of the true standard-setting bodies. A consolidation of countries’ blacklists says nothing of the reasonableness of the criteria involved in creating them.”

Tribune Business revealed last week how the EU had ‘blacklisted’ the Bahamas, and 29 other small jurisdictions and international financial centres (IFCs), on the grounds they were ‘not doing enough’ to crack down on tax avoidance by individuals and multinational companies.

The listing was published as the EU announced plans to combat corporate tax avoidance by companies. Pierre Moscovici, the EU’s top tax official, said: “These tax havens cover the five continents.”

He called on the Bahamas and other listed nations, who included Barbados and major IFC rivals, the Cayman Islands, Bermuda, British Virgin Islands, Panama, Guernsey, Hong Kong and Liechtenstein, to quickly adopt “agreed international standards” to fight against tax evasion.

Mr Moscovici described the Bahamas and other listed jurisdictions as the EU’s “top 30” non-cooperative nations, based on the fact that they all featured on at least 10 ‘blacklists’ of EU member states.

The Ministry of Financial Services took a similar line to Ms Allen in its response, describing as “regrettable” the EU’s seeming failure to account for the Bahamas’ compliance with existing international tax information exchange standards.

“It is disappointing that the Bahamas has been placed on a European Union ‘blacklist’ of jurisdictions that have been identified as facilitating tax evasion,” the Ministry said.

“It is also regrettable that the EU ‘blacklist’ does not take into consideration the significant efforts and accomplishments experienced by the Bahamas in the area of tax transparency, both within the EU and globally.

“This includes the many tax information exchange agreements (TIEAs) signed by the Bahamas, progress within the OECD Global Forum on Automatic Exchange of Information (OAEI), and more recently the landmark action taken by the Government of the Bahamas in signing the Inter-Governmental Agreement with the United States of America as it relates to the Foreign Account Tax Compliance Act (FATCA).”

Tribune Business understands there is considerable disquiet within some Bahamas Government circles over the EU action. They feel it ‘blindsided’ this nation and the other IFCs, given that there was no discussion or warnings given on the issue at last week’s summit between EU and CARICOM leaders in Brussels, which was attended by Prime Minister Perry Christie in his capacity as head of CARICOM.

This newspaper reported last week that the EU ‘blacklist’ seemed more symbolic than an actual threat. There were international media suggestions that its publication was designed to distract attention from the ‘tax avoidance/minimisation’ structures that companies have employed in one of its member states, Luxembourg.

Thus far, there appears to be no threat of sanctions or penalties by the EU towards the Bahamas and other listed countries, but the potential to deter European clients from doing business with this nation - and reputational fallout - cannot be underestimated.

John Delaney, the former attorney general, last week accused the EU of “dumping on” the Bahamas via an unjustified ‘blacklist’. He said the move appeared to be based on “superficial and suspect” criteria, adding that it needed to be taken “with a big grain of salt”.

Mr Delaney said the Bahamas had complied with every global tax information and transparency standard emanating from the likes of the G-7 nations and Organisation for Economic Co-Operation and Development (OECD).

He added that it had also committed to comply with the automatic tax information exchange standard that will take effect from 2018, thus directly rebutting Mr Moscovici’s call for the listed states to adopt “agreed global benchmarks”.

“All I can say to you is that it smacks to me of being quite unfair to the Bahamas, being so arbitrary,” Mr Delaney said of the EU ‘blacklist’, “and more of the same of being dumped on by very subjective and suspect criteria.

“Standards, we understand, are evolving, but when these standards evolve the Bahamas has consistently moved to ensure they’re aligned with best international practices, and that continues to be the case.”

The full ‘blacklist’ is: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, Panama, Saint-Vincent and the Grenadines, Saint Christopher and Nevis, Turks and Caicos Islands, U.S. Virgin Islands, Andorra, Guernsey, Liechtenstein, Monaco, Liberia, Mauritius, Seychelles, Brunei, Hong Kong, Maldives, Cook Islands, Nauru, Niue, Marshall Islands and Vanuatu.


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