The Dominica government Tuesday said it “is extremely disappointed” that it has been included in a new list of non-cooperative tax jurisdictions which the European Union said was based on an “an intense process of analysis and dialogue steered by the Commission”.
In a statement, the government said Europe acting “unfairly and without proper justification names and shames countries as non-cooperative tax jurisdictions, and in particular by Dominica’s inclusion thereon”
The EU Finance Ministers said that based on the Commission’s screening, they had blacklisted a total of 15 countries including several Caribbean countries namely, Trinidad and Tobago, Barbados, Belize, Bermuda, Dominica and Aruba.
“The list has proven a true success with many countries having changed their laws and tax systems to comply with international standards,” the EU said, adding that over the course of last year, the Commission assessed 92 countries based on three criteria: tax transparency, good governance and real economic activity, as well as one indicator, the existence of a zero corporate tax rate,” the EU said in a statement.
But the Dominica government said that the regional grouping of the EU decided in 2017 to adopt a new set of tax standards over and above that set out by the Organisation for Economic Cooperation and Development (OECD), the international organisation mandated by a wide range of member states to monitor and set standards of compliance on tax good governance.
“When this list was first issued in December 2017, Dominica and other Caribbean islands were put on a grey list and were asked by the EU to commit to making certain changes within one year to avoid being put on a blacklist.”
The government said the island was put on the grey list in December 2017 notwithstanding the complete devastation caused by Hurricane Maria when it slammed into the country as a Category Five storm.
“With our country shut down after Maria, electricity down island-wide, communications disrupted, our people homeless and in desperate need of immediate assistance, 90 per cent of homes damaged and in some instances destroyed, roads impassable, businesses shut down for an extended period, the EU gave us, in our devastated condition, no more time than any other country to comply with their demands.”
Dominica said that despite these “very difficult and devastating circumstances and conditions we ensured that we complied with all the legislative changes that were requested by the EU”.
It said that the proceedings of the Parliament were broadcast live where these changes were considered and debated.
“It is important to note that one of the requirements requested by the EU was the joining of the Convention on Mutual Administrative Assistance in Tax Matters which requires the sanction of the OECD.”
It said this would have would have allowed for the passage of the Automatic Exchange of Information Act, that the EU had requested.
“We had applied since 31st May, 2017 to the OECD to join that Convention. Subsequent correspondences including letters dated 23rd February, 2018, 29th August 2018 and 19th December, 2018 reiterated our commitment and desire to join that Convention.
“We have answered all questions and provided all information required and anticipated that we would have had a positive response to our request by the end of December 2018. However, and through absolutely no fault of the Government of Dominica, we have to date, not been given final clearance from the OECD or a substantive response to our application.”
The statement noted that senior government ministers and public officers have explained these facts and the failure to respond to the island’s application to join the Convention on Mutual Administrative Assistance in Tax Matters, to EU representatives, to the EU Code of Conduct Group, EU TAXUD and the EU Council on numerous occasions.
“In February this year, we wrote to the EU requesting an extension of time to allow for a response to be obtained from the OECD to our application. Regrettably, we received no response.”
The statement said notwithstanding the indisputable facts “we have been blacklisted by the EU on the “grounds” that “Dominica does not apply any automatic exchange of financial information, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended and has not yet resolved these issues.”
“This statement of the grounds is misleading, and manifestly unfair. The only reason why Dominica “has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended ‘ is that the OECD has to date not given the go ahead to Dominica to sign on. In other words Dominica is being penalized while it is awaiting a response, and notwithstanding there was and is nothing else it can do or could have done,” the statement said.
It added that “in fact, and in furtherance of a favourable response, we prepared legislation to take to the
Parliament in January this year to have the Parliament approve and pass these Conventions into law.
“We had to withdraw those Bills when no clearance was received from the OECD,” the Dominica government said, adding “the EU has been a very good development partner of Dominica and has responded in a positive and very tangible way and has been working with Dominica very closely to respond to the challenges of Hurricane Maria.
“In all of the circumstances we are indeed surprised and dismayed at the decision of the EU ECOFIN Council communicated today.
“We will at all costs endeavour to have the OECD respond to our request to address this sole outstanding issue with the EU in order that Dominica can be removed from this list as soon as possible,” the statement added.