“The Government is extremely disappointed with the decision of the EU to include Grenada on the list of countries that are not compliant with tax regulations”. Those were the words uttered by Economic Development Minister, Oliver Joseph who conducted an exclusive interview with THE NEW TODAY newspaper Monday on the EU’s latest assessment of the tax information exchange system in the country.
Grenada is among 14 Caribbean nations on the EU’s list of 30 countries labeled as the worse tax havens.
According to Minister Joseph the list of blacklisted countries comes as a result of complaints made to the European Commission by 10 countries out of a total of the 27 in Europe.
“By blacklisting us they are saying that they would not want countries around the world to come to our jurisdiction to do business and that we do not have the correct tax policy’s in place…but if you look at it what this really means is that we have a lower tax rate,” he said.
“This is strange…They complained to the European Commission that 30 countries around the world (including Grenada are operating as tax havens)…”, he addd.
According to the senior government minister, this simply means that “we are offering a better tax rate to investors for which to deposit their monies outside than they (the EU States) are offering”.
“If you have money to save then you wouldn’t want to pay 30% tax on it…you want to pay the least amount”, he said.
Minister Joseph added that the “(EU) countries are complaining because their people are moving out and going into other jurisdictions where the tax rate is lower to save their monies.”
“That’s the only reason they are complaining,” said Minister Joseph, who also holds the portfolios for Trade, Planning, Cooperatives and International Business.
The Minister noted that “we (Grenada) have signed 32 tax information exchange agreements in the global forum, where the standards are reported” for which Grenada is “rated as being largely compliant” in “the United States, the UK (United Kingdom), Germany, France – the major countries that do business with Grenada (and) they are not the ones that are blacklisting us”.
“When I look at the list of the 10 European nations (that did the blacklisting), most of them are new to the EU system and they are group countries that we do not have tax agreements with…”, he said.
“… They have not approached us to negotiate any double taxation convention with them on tax information exchange…but we are prepared to negotiate an arrangement because we have revamped the offshore sector”, he added.
The Member of Parliament for St. David questioned the rationale used by these EU nations to put out the blacklist.
He said: “…When they use the word ‘harmful tax competition’ you also have to understand harmful to who”.
“They consider it harmful to their jurisdiction. In fact the amount of money moving to the Caribbean (from these EU States) is very small compared to the big countries where billions of dollars are transferred, but they are not attacking the large countries, they are targeting very small countries around the world,” he remarked.
According to Minister Joseph “there is no active offshore sectors taking place” in Grenada at the moment and as such the decision of these particular European nations can only be described as a “very ill-informed” one.
“If they did their research properly they would realise from their countries like Bulgaria, Korecia, and Estonia – they don’t do business with us. So putting us (Grenada) on the list has no effect on us because the countries that we do business with they do not have us on any black list,” he said.
Like Minister Joseph, Prime Minister Dr. Keith Mitchell has openly complained about the European Union’s decision to include the island on a list of 30 international tax havens.
“Grenada’s inclusion implies that Grenada is not doing sufficient to guard against harmful tax practices,” Dr. Mitchell told legislators on Tuesday.
He said the NNP-led administration was “profoundly disappointed by the decision” and he faulted the EU for ignoring the hard work done by Grenada to comply with global standards for transparency.
The European Commission issued the list last week Wednesday as it unveiled a plan for tackling corporate tax avoidance.
The aim of that plan is to tax companies where they earn their profits, rather than allowing them to shift money into low-tax jurisdictions.
Jurisdictions commonly labeled as offshore tax avoidance hubs, including Luxembourg, Jersey and Switzerland, were not on the list.
Apart from Grenada, the other countries on the black list include Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Montserrat, St. Vincent and the Grenadines, St. Kitts and Nevis, and the Turks and Caicos Islands and the US Virgin Islands.
It is completed by Andorra, Liechtenstein, Guernsey, Monaco, Mauritius, Liberia, Seychelles, Brunei, Hong Kong, Maldives, Cook Islands, Nauru, Niue, Marshall Islands, Panama and Vanuatu.
The European Commissioner for Economics, Taxation and Customs, Pierre Moscovici was reported as saying, that publishing the list of “non-cooperative jurisdictions” was a decisive step in pushing the territories to adopt international standards.
“Our citizens can no longer tolerate that certain companies, often the most prosperous, avoid fair tax contributions and that certain tax regimes encourage them on this path,” he said.