OECD says Saint Lucia’s CBI programme potentially poses a ‘high risk’

[dropcap]T[/dropcap]he Organisation for Economic Co-operation and Development is a 36-member inter-governmental organisation, founded in 1961. Its mission is to “promote policies that will improve the economic and social well-being of people around the world.” It provides a forum for members to work together toward solutions to common problems. Prominent member countries include the US, the United Kingdom, Canada and Japan. In 2014 it developed the Common Reporting Standard which requires all member states to obtain information from financial institutions in their country, and to exchange that information with other institutions on an annual basis—in the hope of fighting tax evasion.

On Tuesday the organisation published a list of 21 countries it believes may threaten their efforts. The countries listed each offer a Citizenship by Investment, or Resident by Investment programme.

The release states: “While residence and citizenship by investment (CBI/RBI) schemes allow individuals to obtain citizenship or residence rights through local investments, or against a flat fee for perfectly legitimate reasons, they can also be potentially misused to hide their assets offshore, by escaping reporting under the OECD/G20 Common Reporting Standard (CRS).”  The OECD says it has analyzed over 100 CBI/RBI schemes offered by CRS-committed jurisdictions. It then identified which of those schemes “potentially pose a high-risk to the integrity of CRS”.

The OECD explained that potentially high-risk schemes give “access to a low personal income tax rate on offshore financial assets, and do not require an individual to spend a significant amount of time in the location offering the scheme.”

Listed are the five Caribbean nations that operate CBI programmes: Antigua and Barbuda, Saint Lucia, Grenada, Dominica and St Kitts & Nevis. Joining them are the Bahamas, Montserrat and Barbados who offer resident programmes.

Nestor Alfred, the Chief Executive Officer of the Saint Lucia Citizenship by Investment Unit, responded to the OECD’s undertaking on Thursday. “If the OECD believes their economies are going to be deprived of additional revenue, they’re going to raise concerns,” said Mr. Nestor. “It’s left for the governments of those regions to determine whether they’re going to change legislatively the provisions. There needs to be discussions with the OECD.”

The CEO added: “I don’t think there’ll be fall-out. Applicants who have a general desire to travel the world will continue applying to countries that grant citizenship, such as Saint Lucia.”