PM Denounces St Kitts' Inclusion On French Blacklist
Monday, February 22, 2010
St Kitts and Nevis Prime Minister, Denzil Douglas, has denounced the
Federation’s placement on France’s new blacklist of non-cooperative
territories. He said that efforts taken by the Federation, and by other
OECS countries, to meet international compliance standards relating to their financial
services sector, is like “working towards a moving target.”
A statement from the Prime Minister’s Office said: “This blacklisting
by France of countries that they claim have failed to cooperate on tax issues
has caused tremendous concern for the Federation for a number of reasons.”
“The Federation has concluded negotiations and initialed agreements
with 17 countries for the exchange of tax information and double taxation agreements
by the end of 2009 and was in a position to sign all of these agreements at
Douglas commented: ”The Federation was told that we would have to wait until these OECD
countries carried out their internal bureaucratic processes before we could
be given a date or a venue for signature. We were able to sign eight of these
agreements by the end of 2009 and we signed our ninth agreement with the UK
in January of this year.”
”It is extremely unfair for St Kitts and Nevis to now be penalized by
France for not meeting the required standard of 12 signed tax agreements as
we sit and wait for OECD member countries to inform us that they are ready to
sign these agreements.”
Douglas further informed that, responding to a call by St Kitts and Nevis
and other OECS countries for assistance in getting agreements signed with OECD
member countries in a more timely fashion, the World Bank has announced the
appointment of a consultant to assist the OECS countries with this process.
“This consultant has actually negotiated with France the text of a Tax
Information Exchange Agreement on behalf of the OECS countries which the Federation
signed off on last month and we are now awaiting a date for signature of this
agreement from the French government. It is therefore surprising that despite
this development, France has seen it fit to move ahead of its other G20 counterparts
to issue its own blacklist and to announce sanctions with effect from March
1, 2010, which are indeed quite punitive and will completely stagnate any investment
by French nationals into the Federation and the OECS region. It is of further
concern that countries blacklisted by France, even if they meet the international
standard one week later, will remain on this blacklist until January 1, 2011,
when this list will again reviewed,” the statement noted.
The statement added that it was based on the fear of situations like this blacklisting
by France that in March 2009, the government passed the St Christopher and
Nevis (Mutual Exchange of Information on Taxation Matters) Act, No 7 2009, which
provides the legal framework for the Federation to give the force of law to
Tax Information Exchange Agreements (TIEAs) signed by the Federation and allowing
the Federation to unilaterally list countries in a schedule to this Act which
would be entitled to make requests for tax information to the Federation pursuant
to rules which are included in a schedule to this Act.
“These rules are based on the OECD model [TIEA]
and are therefore in compliance with the international standard. The reason
for the government taking this initiative was firstly to ensure that we would
not be hindered by the cost and time involved in negotiating tax treaties to
enable us to comply with our international obligations. Our experience in being
able to receive dates for the signing of our already negotiated agreements has
demonstrated that this fear was in fact justified,” it said.
"The OECD in a publication on its website dated April 21, 2009, entitled 'Countering
Offshore Tax Evasion: Some Questions and Answers on the Project'
clearly stated that the standard for transparency and tax information exchange
can be implemented “through bilateral tax treaties or [TIEAs]; by multilateral agreements; or by domestic legislation
allowing for the provision of information on a unilateral basis.”
Despite this endorsement of the unilateral mechanism by the OECD in its publication,
the unilateral mechanism adopted by the Federation in March of 2009 to facilitate
the provision of tax information to countries that make requests to the Federation
is yet to be adopted by the OECD as a mechanism for implementation of the standard.
Douglas further noted that the government has been advised that the Global Forum,
following an intervention made by St Kitts at the September 2009 Global Forum
in Mexico, is now looking into the matter. However, this move to review this
mechanism has obviously come a little too late for the Federation and many other
The Federation will be signing a TIEA with six
Nordic countries on March 24, 2010, and will at the latest be removed from the
OECD "grey list" on that date.
“This being said, we will continue to do our part to advocate for the
official recognition of the unilateral mechanism to ensure that in the event
that the threshold is again changed in the future, that we will not be in the
position we now find ourselves where we are at the mercy of the bureaucracy
of OECD countries. We will also continue with our attempts to bring a final
conclusion to the negotiations with the countries that we have already initialed
tax agreements with and with other countries that we are currently negotiating
with,” said the statement.
St Kitts and Nevis has already signed agreements with Monaco, The Netherlands,
The Netherlands Antilles, Aruba, the United Kingdom, Denmark, Belgium, New Zealand
Countries the Federation has initialed or concluded negotiations with and
are awaiting dates for signature are Australia, Canada, France, Germany, Norway,
Sweden, Greenland, the Faroe Islands, Iceland, Finland and San Marino.
Countries the Federation has commenced discussions with about TIEAs but have not yet confirmed the text for these agreements
are India, Japan, the Seychelles and the United States.