No need to panic about Panama Papers Scandal
Thirty-four companies in Barbados are allegedly listed among the thousands named in the 11.5 million confidential papers leaked from the Panamanian law firm Mossack Fonseca, detailing the establishment of offshore companies for the global elite. However, Executive Director of the Barbados International Business Association (BIBA) believes that while this may be an area to watch, there is no reason for Barbados to panic. “Developments of this sort are typically a cause for concern for us, as Caribbean and Latin American international financial centres (IFC) are always tarred with the same brush,” says Mr Holmes. “However, we must be confident about what Brand Barbados stands for and focus on the continuous improvement of what this jurisdiction offers, both in terms of products and providers,” he said. The Executive Director made reference to the recently enacted Corporate & Trust Service Providers Act which has initiated the process of licensing and regulating firms providing corporate, trust and management services to international companies and investors. “The setting up of corporate structures in IFCs for the purpose of global tax minimisation is not an illegal activity,” states Mr Holmes. “However, since the beginning of the global financial crisis and its deleterious effect on the tax revenues of the developed countries the offshore financial centres have been targeted as the reason and made to suffer vilification and harassment”. “The motivation for this seems very much a political reaction to moral outcries of the citizens of these countries who, with their limited understanding of how economies work, are of the view that the companies that are practicing global tax planning are not paying their fair share of the tax and therefore engaging in something that is dishonest,” said the Executive Director. “Perhaps there are circumstances where the individuals behind the corporate structures are under a duty to declare the existence of these types of companies and when they don’t this may lead to the view that they are hiding something, or worse engaging in something that is illegal”. OECD’s Secretary-General Angel Gurría issued a statement that the Mossack Fonseca leak “shone the light on Panama’s culture and practice of secrecy”. He described Panama as “the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities”, and said the OECD has been “consistently warned of the risks of countries like Panama failing to comply with the international tax transparency standards.” “One can only surmise from his comments that more pressure, and blacklisting / naming and shaming of this type will follow, whether it is warranted or not,” said Mr Holmes. “Barbados does not have a reputation for secrecy. We are perceived as a well regulated jurisdiction insisting on transparency,” he continued. “The question you may wish to ask is “If a list of companies incorporated and managed by a law firm in Delaware, Nevada or Wyoming was to be leaked would the global reaction be the same?” Minister of Industry, International Business, Commerce and Small Business Development, and Vice Chair of the Steering Group of the Global Forum on Transparency and Exchange of Information for Tax Purposes within the Organisation for Economic Cooperation and Development, Donville Inniss noted in a recent Press Release, that Barbados has long embraced transparency and the exchange of tax information between governments. As evidenced, Barbados has officially and publicly endorsed the OECD’s Global Standard for the Automatic Exchange of Information and has agreed to facilitate compliance with the US Foreign Account Tax Compliance Act. “Additionally, beyond being highly cooperative and transparent, Barbados’ position as a preeminent low tax jurisdiction attracts business of substance and ethical business structures that provide significant benefits to both domestic markets and the global economy,” said Minister Inniss.
US cautions Caribbean countries offering economic citizenship
The United States Government has cautioned Caribbean countries offering a Citizenship by Investment Programme (CIP) to be extra cautious about who they give their passports to, and ensure that recipients have no terrorist or crime links. It gave the advice, in a statement issued by the US Embassy in Barbados yesterday, even as it made it that it was not advising regional countries on whether or not they should offer economic citizenship. Under the CIP offered by countries like Antigua and Barbuda, St. Kitts and Nevis and Dominica, foreign nationals are granted citizenship in exchange for a substantial investment in the country. “The United States does not approve or disapprove individual aspects of citizenship by investment programmes,” the US statement said. “The United States strongly believes that all countries have an inherent responsibility to their citizens and the international community to review fully all applicants who seek a nation’s citizenship.” “While the United States Government is willing to consult with governments on their citizenship investment programmes, the ultimate decisions to offer and how to operate such a programme, including the issuance of citizenship and related identifying documents, such as passports to applicants, lie with each individual government and not with the United States.” But, the statement added, the US Government encourages and expects governments to be confident, beyond a reasonable doubt, that applicants are bona fide and their identities have been fully validated, and they have no ties to transnational criminal or terrorist organizations, before handing over citizenship. The US Embassy did not identify any specific country in its statement. However, there has been concern in Antigua and Barbuda about the government’s recent decision to remove Iraq from the list of countries whose nationals are barred from obtaining citizenship under the twin-island nation’s CIP. The main opposition United Progressive Party (UPP) is strongly against it. Political leader Harold Lovell said late last month that given the entrenchment of Islamic State in Iraq and Syria (ISIS) in the Middle Eastern country, that move and the decision by the Gaston Browne administration to establish a presence in Iraq, expose Antigua & Barbuda to danger and compromise the integrity of the country’s passport. Last November, the St. Kitts and Nevis Government announced an immediate suspension of the processing of new CBI applications from citizens and residents of Syria. The announcement came less than two weeks after ISIS carried out attacks in Paris, and also followed the arrest of Syrian nationals with fake passports in Honduras and St. Maarten, although the government did not publicly identify those developments as contributing to its decision. Article compliments Caribbean360.com
Gibraltar joins G5 initiative on Automatic Exchange of Beneficial Ownership Information
The Gibraltar government have announced it has given a commitment to embrace the G5 initiative on automatic exchange of beneficial ownership, along with EU Member States, reports Vox. It is fully expected by the G5 that further countries and territories outside the European Union will begin to participate as from next week. Gibraltar’s commitment was contained in a letter sent by the Chief Minister, the Hon Fabian Picardo QC MP, to the Chancellor of the Exchequer, George Osborne, yesterday evening following discussions between respective officials and a conversation between the Hon Albert Isola and the United Kingdom Financial Secretary, the Right Hon David Gauke MP. This initiative is designed to be the global standard in the area of transparency in the same way as the Common Reporting Standard has become so in the field of automatic information exchange for tax purposes, which Gibraltar also joined in 2014. Entities covered by this agreement will be those already identified in the 4th Anti Money Laundering Directive which Gibraltar is transposing. A critical part of the initiative on beneficial ownership requires a strict application of data protection and confidentiality by all countries and territories that participate. The Chief Minister said: “The Government’s position as regards international standards is clear; Gibraltar will adhere to internationally agreed principles of cooperation that deliver a level playing field and we are at the forefront of compliance along with the United Kingdom and other EU states.” Article compliments IFC Review.