Taxes to be harmonised to avoid blacklisting

The Antigua and Barbuda government is to take steps to harmonise the offshore and onshore tax rates for financial services to avoid the European Union making good on a threat to blacklist the country if it fails to comply. The European Council of Finance Ministers last month published a list of 17 countries it regarded as noncooperative jurisdictions in taxation matters.
Grenada, Barbados, St. Lucia, and Trinidad and Tobago were among those immediately blacklisted. Antigua and Barbuda, and several other Caribbean states that were affected by the September hurricanes, were given a reprieve to get themselves compliant. According to the EU’s December statement: “They will be asked to address the concerns identified as soon as the situation improves, with a view to resolving them by the end of 2018. By February 2018, they will be contacted to prepare the next steps.”
During Thursday’s budget speech Prime Minister Gaston Browne said compliance was the only recourse available to the country. “Antigua and Barbuda, like many other small jurisdictions within the Caribbean and outside of it, has bent over backwards, year after year, to comply with the demands of the organisations of these big countries. Those organisations include the Financial Action Task Force, the Organisation for Economic Cooperation and Development and the Commission of the European Union.
“And, even though many members of their own organisations are not in compliance with their own rules, they apply their demands on us stringently, and blacklist us if we argue. The system is not fair and the playing field is very far from level. But in the absence of a collective approach by all the victim countries, small jurisdictions such as Antigua and Barbuda have no choice but to yield,” Browne said.
The PM said blacklisting would affect both the international financial sector and the domestic banking sector. It also means the country may no longer receive EU assistance. Disclosing the threat from the EU last month Browne stated that complying with the demand meant that local revenue collection would suffer. “If we were to eliminate, let’s say 23 percent on the domestic tax rate and reduce it to 2 percent, then we would see perhaps a $60 million reduction in revenue which the government certainly cannot afford.
Now on the other hand, if we increase the offshore sector to 25 percent we may lose the entire industry. So we have … a serious dilemma which we’re not sure how we’re going to resolve this one,” Browne stated.
(More in today’s Daily Observer)