Tax haven hell

Since 2008, thanks to the action of the G20, tax cooperation between countries has become the rule, and bank secrecy for tax purposes is ending. Fixing the international tax system to close loopholes and improve transparency has been a key priority of the G20 since its inception.

In September 2013, the G20 leaders committed to automatic exchange of information as the new global standard, and in February 2014 the Standard for Automatic Exchange of Financial Account Information in Tax Matters, which is similar to the Model 1 IGA that many jurisdictions will use for implementing FATCA, was issued by the Organisation for Economic Co-operation and Development (OECD).

The Global Forum on Transparency and Exchange of Information for Tax Purposes is a body emanating from the OECD which seeks to address the risks to tax compliance posed by non-cooperative jurisdictions.

Trinidad and Tobago has been a member of the Global Forum since 2011 because of its intention to establish the Trinidad and Tobago International Financial Centre.

Last month, the Global Forum published its provisional ratings and Trinidad and Tobago has been identified as the only jurisdiction which has not yet made sufficient progress toward satisfactory implementation of the tax transparency standards.

Out of a total of 15 jurisdictions which previously had a less than satisfactory rating, only Trinidad and Tobago was unable to demonstrate progress to warrant any upgrade. The other jurisdictions made many changes to be upgraded, including the elimination of strict bank secrecy and a more rigorous oversight and enforcement of obligations to maintain information.

To avoid being included on the list of non-cooperative jurisdictions, countries needed to meet at least two of the three benchmarks which are, firstly, to be at least “largely compliant” with respect to the exchange of information on request (EOIR), standard two, to commit to implement the automatic exchange of information (AEOI) standard, with first exchanges in 2018, and three, to participate in the Multilateral Convention on Mutual Administrative Assistance on Tax Matters or a sufficiently broad exchange network permitting both EOIR and AEOI.

We have not met two of the three benchmarks.

Because of this, adding to the debacle that surrounded FATCA which remains to be proclaimed, there could be a perception of Trinidad and Tobago as a tax haven, a view which would hamper our ability to do business and possibly threaten the viability of our financial sector, the second major source of GDP. Countries that are considered tax havens are usually spurned by the international community and this can have debilitating and long-lasting effects on our economy.

Just recently the US Department of State indicated that Trinidad and Tobago had the highest per capita rate of ISIS recruitment in the Americas, and in the 2017 Global Peace Index, Trinidad and Tobago ranked the most dangerous English-speaking Caribbean country.

Minister in the Office of the Prime Minister, Stuart Young, said that perception is reality. If you are perceived to be something, you might as well be it because that’s the truth in people’s minds.

It is time to change the perception of Trinidad and Tobago and rebuild our international reputation.

It appears someone dropped the ball. Our economy is far too fragile to make such potentially costly mistakes