[dropcap]F[/dropcap]or some the blacklisting of a country, sanctions under a Leahy Law, or how we are seen by investors, is not something that should be used as political fodder. For right-thinking persons telling potential investors to turn away from the country of your birth because you are bitter, is simply unfathomable. Then there are others amongst us who are not of this view and have sought to use those issues for partisan gain, no matter the consequences.
However, behind the scenes are some Government officials and technocrats, who have served both administrations, who put country first, and who understand that working on resolving these issues takes a measured approach which involves specific steps and dialogue. It takes meetings that start in the morning and end well into the night; it takes all hands on deck, working for the best outcome for our country.
Hence, for some time the Ministry of Finance has been working to resolve the recent issue of the EU placing Saint Lucia amongst 17 countries on its first time list of non-cooperative jurisdictions for tax purposes otherwise referred to as “the blacklist.” At the same time in December 2017 another 47 countries which had promised to change their tax rules to meet EU standards had been placed on a grey list. The countries on the grey list have just about a year to comply to meet EU standards on tax transparency under threat of being placed on the blacklist. Hence a simple letter to the EU committing to reforms is hardly enough, there must be tangible evidence that the country is engaging in activities towards those reforms.
The Government of Saint Lucia is aware of the issues associated with being on this list and have always been committed to working with the EU toward tax transparency. The blacklisting of Saint Lucia is not an issue that occurred overnight and Government must take everything into account because even as we are committed to tax transparency and the exchange of information we must also simultaneously stimulate growth in the economy, to provide a favourable environment for our people to live, work and invest.
Hence, yes, this takes dialogue with the EU, so we can state our position, efforts made and decide on a way forward. For some, myopic in their view, a quick fix, “send the letter, sign on the dotted line” might seem like the only option, but a Prime Minister and Government must consider the consequential effects.
Before Saint Lucia was placed on this list we had demonstrated a commitment to Exchange of Information and tax transparency by participating fully in the Global Forum on Transparency and by working with various jurisdictions in matters pertaining to tax. The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) consists of OECD countries and jurisdictions that have agreed to implement tax related transparency measures and information exchange. The Global Forum works under the auspices of the OECD and the G20 countries and addresses various issues such as tax evasion, money laundering, offshore financial centers, double taxation and tax information exchange agreements.
In today’s world we know that the Exchange of Information (EOI) has emerged as a dynamic aspect of financial administration. The Prime Minister has also during his travels engaged in dialogue with several countries to increase the number of exchange agreements, with the aim of fostering greater tax transparency and co-operation.
The financial sector can also confirm that Saint Lucia has made headway with respect to automatic exchange and we have successfully reported with respect to the Foreign Account Tax Compliance Act (FATCA) in 2016 and again in 2017. There’s more: Saint Lucia signed the Multilateral Competent Authority Agreement (MCAA) on October 29th 2015 and later ratified the Convention on Mutual Administrative Assistance in Tax Matters (MAC) on November 21st 2016. Based on information from the Ministry of Finance, the first reports associated with the MCAA and MAC are scheduled for submission under the Common Reporting Standard (CRS) in September 2018, and Saint Lucia is well placed to report by the due date.
As a small island developing state, with limited resources, we have still made significant investments in software, equipment, staffing and training. Our Government has put in place new procedures, policies have been instituted at various institutions, and new legislation and legislative amendments have been enacted, all geared towards meeting international standards in tax transparency.
Based on our efforts and dialogue with the EU, the Government has admitted that the blacklisting is of serious concern and initially we were awaiting official correspondence from the EU Council outlining the expectations of the EU. Saint Lucia wrote back to the EU in early January 2018. The Ministry of Finance has since received this correspondence and a follow up meeting was held with the EU via a conference call facilitated by the General Secretariat of the Code of Conduct Group (COCG) on January 22nd. At that meeting the COCG advised Saint Lucia on the requirements for delisting; the concerns of the EU and the next steps. Ministry of Finance officials have reported that the meeting went well and they are awaiting further correspondence from the Group regarding Saint Lucia’s position in February.
Meanwhile the Prime Minister and the Government are continuing Saint Lucia’s work towards globally acceptable tax standards. The Government is seeking to develop a more harmonised tax system while remaining competitive and attractive to foreign direct investment. It is the Government’s hope that Saint Lucia will be moved to the EU grey list and subsequently removed from the list altogether. As the dialogue continues by Finance officials let us all keep in mind that the resolution of this issue is to the benefit if us all as Saint Lucians.
For daily updates on Government’s progress visit: https://www.facebook.com/opmsaintlucia/
