Page 25 - IB MAR 2019

Business

EU says tax blacklisting should be no surprise

By Samantha Magick disappointed, saying: “The Mar-
shall Islands government has
FIJI, the Marshall Islands and Vanuatu have been added to a acted in good faith to implement
European Union blacklist of tax havens. And despite concerns several key pieces of legislation
about process raised by all three countries, the EU has told Is- and regulations to address its
lands Business that these jurisdictions should not be surprised commitments made to the EU,
to find themselves on the list, “as they were given every chance including exchange of information,
to engage and address EU concerns.” economic substance requirements,
The countries were added to the blacklist in March, joining and country by country reporting.
Samoa, American Samoa and Guam who were already on the “While the current state of
list, but had been given a year to change their tax rules. affairs is unfortunate, the govern-
Calling the list a “last resort”, the EU states: “Over the course of ment will continue to work with
2018, countries were assessed on the basis of three criteria – tax the EU to highlight the significant
transparency, good governance and real economic activity – as FRCS Chief Executive Visvanath compliance initiatives undertaken
well as one indicator, the existence of a zero rate of corporate Das says the blacklisting is “largely by the Marshall Islands which
tax. This methodology is clear, transparent to all jurisdictions symbolic.” justify removal from the list of
concerned and supported by all Member States. Our method is fair: non-cooperative jurisdictions.”
progress made should be acknowledged and visible in the list.” The EU says the list of non-cooperative countries has helped
The blacklist, which was first established in 2017, subjects many of them change their laws and systems to comply with
identified countries to stricter controls on transactions with the international standards.
EU and reputational damage. It includes tax jurisdictions which “The update is based on an intense process of analysis and
are alleged not to comply with EU regulations. In effect, it means dialogue steered by the Commission. It shows that this clear,
European banks must carry out extra checks and due-diligence on transparent and credible process delivered a real change: 60
any transactions involving customers or other financial institu- countries took action on the Commission’s concerns and over 100
tions in the listed countries and territories. harmful regimes were changed. The list has also had a positive
However Fiji’s Revenue & Customs Service has dismissed the influence on internationally agreed tax good governance stan-
listing as “largely symbolic” and says it will have virtually no dards. The process is a dynamic one, and as such it will continue
impact on the minimal EU trade and investment in the country. in the years ahead.”
FRCS Chief Executive Visvanath Das claims the EU’s decision Additional reporting by DIonisia Tabureguci
was based on the incentive package that Fiji uses to attract and
cultivate new business, such as moving headquarters to Fiji. He
says Fiji stands by this package, and that the EU did not take this Sara Lee International TM Holdings, LLC, A Delaware Limited liability
into consideration during consultation on the issue. company, does hereby provide notice that it claims proprietorship of
In response the EU says while jurisdictions can design their tax the trade marks
systems as they wish, “not being in line with the good governance SARA LEE
standards the EU is promoting, implies being included in the list and
of non-cooperative tax jurisdictions.”
“Furthermore, Fiji’s commitment to comply with two articles
under Tax Transparency and the implementation of the anti- Base
Erosion and Profit Shifting (BEPS) measures by the end of 2019 in relation to:
will continue to be monitored. BEPS refers to tax avoidance strate- Chilled/frozen desserts; bakery desserts; sweet bakery goods; bakery
gies that exploit gaps and mismatches in tax rules to artificially products, namely, cakes, rolls, pastries, pies, pound cake, cheesecake,
shift profits to low or no-tax locations,” it says. loaf cake, cookies; confectionery; ice cream; mousses; puddings;
Vanuatu’s Foreign Minister Ralph Regenvanu has likened the prepared meals and entrees consisting of pasta; sandwiches, quiche,
list to “trying to play a game when the rules of the game are refrigerated dough.
always changing, the goalposts are always being shifted and Sara Lee International TM Holdings, LLC cautions that any
there are several different referees.” use of the trade marks
However the EU says the countries concerned have been in- SARA LEE
volved in the process since its start: “a workshop was organised and
in Fiji last year in order to clarify all the points of the process
and engage with each tax jurisdiction on specific issues. Tax
Jurisdictions have been formally informed of each new stage in
the listing process, and were encouraged to further engage with or any confusingly similar trade mark in relation to these goods or
the EU contact points as much as possible.” similar goods, would be seen as infringement of its rights and that it
The EU cited Guam for a second year because it “has not will take such action deemed necessary to protect those rights.
signed and ratified the OECD Multilateral Convention on Mutual
Administrative Assistance.” Guam Governor Lou Leon Guerrero Sara Lee International TM Holdings, LLC can be contacted care of
raised the territory’s listing with U.S. Treasury officials reports their address for service:
the Guam Daily Post, which quotes her as saying: “I don’t think Baker & McKenzie, Tower One - International Towers Sydney,
we have a money-laundering problem here.” Level 46, 100 Barangaroo Avenue, Sydney NSW 2000 Australia
Marshall Islands Finance Minister Brenson Wase is also

Islands Business, March 2019 25