Caribbean offshore financial centres targeted by the recent Organization for Economic Cooperation and Development (OECD) and Financial Stability Forum (FSF) reports are still trying to come to terms with exactly what it all means for their individual jurisdictions. As a summit of the 15-nation Caribbean Community (CARICOM) drew to a close last week, leaders issued a pledge to fight money laundering but dug their heels in over supposed "harmful tax practices", resolutely refusing to change their tax laws as demanded by the OECD and FATF.
CARICOM leaders said that they would send a strongly-worded letter of protest to the OECD in Paris, which last month named five Caribbean jurisdictions for not cooperating in the fight against money laundering and 15 as prime locations for tax evasion. All jurisdictions are clearly worried about the economic effects that the OECD and FATF blacklists could have. At the very beginning of the four-day summit, Sir James Mitchell, CARICOM chairman and prime minister of St. Vincent and the Grenadines, condemned the blacklists and threatened sanctions as 'a direct threat to the region's economic base and stability' at a time when traditional industries such as bananas, sugar and tourism are not faring so well.
Referring to the feelings of the Caribbean community, a summit declaration said 'They deplored the fact that the lists were published with the objective of tainting jurisdictions in the eyes of the investment community and the international financial market. They condemned the actions of the OECD in particular as contrary to the tenets of a global market economy promoted by (rich) countries.'
The declaration also said that the threatened sanctions by the OECD, if the blacklisted countries fail to make changes, had 'no basis in international law.' High Commissioner for Antigua and Barbuda Ronald Sanders said 'We have agreed to write the OECD telling them that we are gravely concerned with the list of so-called tax havens and how it was done so unilaterally. We are willing to meet with them at a multilateral forum to discuss our concerns and we want to tell them that the rules must be applied universally, not unilaterally.'
The CARICOM statement did say, however, that the Carribean nations would 'fight money laundering and all other forms of financial crime' and that member states were planning to 'accelerate their programs of introducing international best practices in their regulating of the financial sector and their strengthening of legislation and enforcement machinery.'
What is clear is that most of the Caribbean juridictions are adamant that they will retain the right to decide their own tax laws. They vehemently deny facilitating tax evasion and see initiatives such as that of the OECD as simply an effort to recoup lost revenues and businesses. Earlier at the summit, Sir James Mitchell had said tax competition is no more than about 'whose treasury gets the money.'
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