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Charlotte Amalie
Friday, March 29, 2024
HomeNewsLocal newsEU Adds Virgin Islands to Tax-Haven Blacklist

EU Adds Virgin Islands to Tax-Haven Blacklist

The U.S. Virgin Islands have come under the scrutiny of the European Union, although the report does not offer specifics of why. (Photo by Jap Lammerering of Caribbean Buzz Helicopter)

National and international reports circulated over the weekend that the Virgin Islands has made it onto the European Union’s black list of alleged tax havens.

It was not immediately clear why the territory was cited. However, the United States is not on the list, and since the V.I. income tax code generally mirrors the federal system, the EU concerns may involve exceptions to the federal tax code, such as VI tax incentive programs.

Attempts to reach V.I. administrative officials Sunday were unsuccessful.

CNBC published an article online saying the move is expected to be formally passed when the 28 EU members meet Tuesday but has already been reduced to writing and that Reuters news service viewed a document dated March 8 that makes several changes to the existing international blacklist.

Those changes include removing three entities from the list (Bahrain, Marshall Islands and Saint Lucia) and adding St. Kitts-Nevis, the Bahamas and the U.S. Virgin Islands. Remaining on the list are six other jurisdictions, American Samoa, Guam, Namibia, Palau, Samoa, and Trinidad and Tobago.

Information on the European Commission’s website makes it clear that the process of placing a jurisdiction on the blacklist is lengthy.

In a Q and A section, the Commission says the process is led by member states who nominate tax experts to screen the tax systems of selected countries and evaluate whether they meet EU standards for transparency.

“Since the very beginning of the exercise, the Commission stressed that the EU listing process must be as fair, transparent and open as possible,” the section reads in part. “At each subsequent stage, high priority was given to ensuring the relevant countries understood the process and could respond. Many bilateral and unilateral meetings were held to this end, and there was extensive correspondence between member states and the jurisdictions concerned … Each country had a chance to present their position, address concerns and discuss how to deepen their cooperation with the EU on tax matters.”

According to the Commission, eight jurisdictions that were badly hit by hurricanes in 2017, including the USVI and St. Kitts and Nevis, were given an extended time, until “early 2018” to respond to EU concerns about their tax practices. It also said, “Jurisdictions that were prepared to cooperate were not listed, so long as they gave a clear and concrete commitment to address the identified tax deficiencies.”

Numerous countries have also made it onto the Commission’s “gray list,” for entities that don’t meet EU tax transparency standards but have made a realistic commitment to improve.

The lists were developed as a way to combat the widespread practice by some super wealthy individuals and some multinational corporations to use tax schemes in off-shore jurisdictions to evade tax bills back home.

The EU has tried to put teeth into the program by linking it to EU funding, but a jurisdiction that receives no such direct or indirect funding may not feel the bite.

 

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2 COMMENTS

  1. I would think that it IS the EDC/EDA (main tax “incentive” program) to which the EU takes exception. While at one time EDC may be been a good idea, it is my opinion that in the long run it has been harmful to the businesses that do not/cannot participate in it. And harmful to the USVI in general as the EU actions suggest. The playing field is not level, and where there is inequality, there is the potential or likelihood for corruption.