THE OECD BLACK LIST – CONCERNS AND CONSEQUENCES
CORRUPTION, MONEY LAUNDERING and TAX EVASION
The Organisation for Economic Cooperation and Development (OECD) in its latest report aims toward resistance to any form of tax-compliance competition when it states that Citizenship by Investment (CBI) and Resident by Investment (RBI) schemes can be and all too often pose risks for “corruption, money laundering and tax evasion”.
The OECD claim is that “identity cards and other documentation obtained through CBI/RBI schemes can potentially be misused to misrepresent an individual’s jurisdiction(s) of tax residence” where these individuals can hide their assets and escape reporting under the Common Reporting Standard.
CBI and RBI PROGRAMMES
In the statement, issued on 17 October 2018, the OECD makes no distinction between CBI and RBI programmes, which include the eight (8) CARICOM countries along with twelve (12) other jurisdictions that have been specifically named.
The eight (8) CARICOM countries are: Antigua and Barbuda, Bahamas, Barbados, Dominica, Grenada, Montserrat, St Kitts-Nevis, and St Lucia.
They join two (2) member-states of the European Union (EU) – Malta and Cyprus – notwithstanding that nine (9), or more, other EU countries offer a form of CBI/RBI schemes. Among the nine (9) EU countries are Britain, Ireland, Italy and Portugal.
No explanation is given for the omission of these nine (9) EU states from the concerns over CBI/RBI programmes, and no explanation is provided for not including the EB-5 programme of the United States or the Quebec Immigrant Investor Programme in Canada.
CYPRUS, MALTA and CARICOM STATES
The EU has clearly admitted that all of its member-states “have various incentives in place to attract foreign investment from non-EU nationals” and that “most of them have CBI or RBI schemes (so-called ‘golden passports’ and ‘golden visas’), characterised by the provision of access to residency in exchange for specified investments”.
However not until two (2) of the smallest jurisdictions in the EU (Cyprus and Malta) among other small nations, for example: the eight (8) CARICOM states, joined in these schemes because of economic necessity, has sentiment and indulgence changed with the times of EU community concerns about “corruption, money laundering and tax evasion”.
GLOBAL ANTI-MONEY LAUNDRY PROGRAMMES
The OECD claim is made notwithstanding the countries identified in the OECD October 17 statement have in place strong anti-money laundering regimes, Tax Information Exchange Agreements and Mutual Legal Assistance Treaties, and are implementing both the US Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standards (CRS).
FATCA and the CRS require jurisdictions to exchange automatically financial information of foreign persons and companies to other countries in which they are liable for tax.
TAX EVASION SCHEMES
In addition, the OECD report asserts that “high-risk” CBI/RBI programmes are those which “give a tax-payer access to a low personal income tax rate of less than 10% on offshore financial assets and do not require significant physical presence of at least 90 days in the jurisdiction offering the CBI/RBI scheme”.
Unless there were to be a proactive and unified action undertaken by all the countries so affected, a high risk exists for punitive action.
THE FUTURE – MOVING FOWARD
If the OECD were to be successful in addressing their concerns resulting in the implementation of their propsed conditions, the CBI/RBI programmes in perhaps all but the most powerful countries will be massively impacted with serious adverse consequences on their economies.
NOTE: Extract from an article by Sir Ronald Sanders, Antigua & Barbuda’s Ambassador to the US and the OAS