By Sir Ronald Sanders
WASHINGTON, DC, United States, Friday October 19, 2018 — Reports are amiss in advertence that eight Caribbean Community (CARICOM) countries are on a ‘black list’ afresh appear by the Organisation for Bread-and-er Cooperation and Development (OECD) over Citizenship by Advance (CBI) and Resident by Advance (RBI) schemes that they operate.
The OECD has not ‘black listed’ these countries – at atomic not yet.
But the date has been set for castigating action, unless there is a proactive and unified acknowledgment by all these countries.
Essentially what the OECD said in its latest attrition to any anatomy of tax antagonism is: CBI/RBI schemes can be aished to balk tax accurately due to their countries of tax abode by the beneficiaries of these schemes.
In the statement, issued on 17 October, the OECD makes no acumen amid CBI and RBI schemes, adverse to announcements from one Caribbean abbot that advance a differentiation. In added words, the eight CARICOM countries are all in this together, forth with twelve added jurisdictions that accept been called specifically.
The eight CARICOM countries (in alphabetic order) are: Antigua and Barbuda, Bahamas, Barbados, Dominica, Grenada, Montserrat, St Kitts-Nevis, and St Lucia. They accompany alone two member-states of the European Union (EU) – Malta and Cyprus – alike admitting at atomic nine added EU countries accomplish a anatomy of CBI/RBI schemes. Among the nine EU countries are Britain, Ireland, Italy and Portugal.
No annual is accustomed for the blank of these 9 EU states from the apropos over CBI/RBI programmes, and none is accustomed for not including the EB-5 programme of the United States or the Quebec Immigrant Investor Programme in Canada.
These omissions apart, at atomic the EU admits that all of its member-states “have assorted incentives in abode to allure adopted advance from non-EU nationals” and that “most of them accept CBI or RBI schemes (so-called ‘golden passports’ and ‘golden visas’), characterised by the accouterment of admission to address in barter for defined investments”.
All of that seemed to be able-bodied and good, until two of the aboriginal jurisdictions in the EU (Cyprus and Malta) and added baby nations, such as the eight CARICOM states, aing in the schemes because of bread-and-er necessity.
Now, the EU and the OECD (in which the EU plays an affecting role) accept absitively that CBI/RBI programmes affectation risks for “corruption, money bed-making and tax evasion”.
This adventurous affirmation is fabricated alike admitting the countries articular in the OECD October 17 annual accept in abode able anti-money bed-making regimes, Tax Advice Barter Agreements and Mutual Legal Assistance Treaties, and are implementing both the US Adopted Annual Tax Compliance Act (FATCA) and the OECD’s Accepted Advertisement Standards (CRS). FACTA and the CRS crave jurisdictions to barter automatically banking advice of adopted bodies and companies to added countries in which they are accountable for tax.
The new OECD affirmation is that “identity cards and added affidavit acquired through CBI/RBI schemes can potentially be aished corruption (sic) to adulterate an individual’s jurisdiction(s) of tax abode and to endanger the able operation of the CRS due activity procedures”.
Of course, this affirmation can be acclimatized calmly by a affirmation for all jurisdictions, everywhere in the world, to necessitate that annual holders or authoritative bodies acknowledge any abode rights they accept in anniversary administration in which they accept it. In this way, submissions would be fabricated to all the jurisdictions of abode of annual holders and authoritative persons, appropriately endlessly any misrepresentation.
But, that is not the alone new affirmation now actuality fabricated by the OECD.
The Organisation additionally asserts that “high-risk” CBI/RBI programmes are those which “give a tax payer admission to a low claimed assets tax amount of beneath than 10% on adopted banking assets and do not crave cogent concrete attendance of at atomic 90 canicule in the administration alms the CBI/RBI scheme”. This closing situation, which the OECD acutely wants terminated, would materially affect CBI/RBI programmes in CARICOM jurisdictions. It finer dictates what tax ante should be and the conditions, which in their absolute right, the CBI/RBI jurisdictions accept set.
Given all this, if the CARICOM jurisdictions are to save their CBI/RBI programmes from decimation, they should anatomy an accord with the added 12 called jurisdictions to appearance a collective acknowledgment afore the OECD moves to its aing footfall which, undoubtedly, will be a atramentous annual that calls for sanctions adjoin them.
None of their interests will be served by any administration that chooses to access an alone acceding with the OECD, ambience a antecedent which all the others will be answerable to follow.
Once any administration readily accepts the OECD dictates, unified activity is disrupted, and all jurisdictions will be afflicted to acquiesce. This disruption of unified activity has been the arrangement of accomplished responses to the OECD’s alleged ‘rules’. The aftereffect has been the abiding aition of the banking casework area and an accessory accident of revenues and jobs to the countries
The afflicted jurisdictions should booty the OECD at its chat that its affair is the abusage of CBI/RBI programmes by beneficiaries to adumbrate their assets and escape advertisement beneath the Accepted Advertisement Standard. As explained beforehand in this commentary, that affair could be calmly satisfied, and CARICOM countries could collectively action to do so.
What is added ambiguous because it invades the absolute rights of states is the branding of CBI/RBI jurisdictions as “high risk” because they ability accept a low tax amount and no affirmation for concrete presence. Indeed, it is conspicuously arguable that these two claims do not anticipate the obligations of the CRS and FACTA to address on the banking assets of annual holders or authoritative persons.
However, if these are altitude that the OECD implements, the CBI/RBI programmes in all but able countries will be decimated with adverse furnishings on their economies.
That is why accepted account to advise actively with the OECD should be a antecedence of CARICOM countries. The abatement of the economies of eight of them will appulse the neighbourhood in which the added seven exist. All are involved, and all can be consumed.
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Sir Ronald Sanders is Antigua and Barbuda’s Ambassador to the US and the OAS. He is additionally a Senior Fellow at the Institute of Commonwealth Studies at the University of London and Massey College in the University of Toronto.
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