Did Government Drop The Ball?

SOMETHING is just not right with the suggestion by Prime Minister Allen Chastanet that St. Lucia is working with the European Union to get off the latter’s list of non-cooperative jurisdictions for tax purposes.

What appears incomprehensible is the fact that St. Lucia is still on the blacklist even when its CARICOM sister countries, Barbados and Grenada, which appeared on the list at the same time as St. Lucia, have both been removed.

What did these two countries do to get off the list that St. Lucia did not do, or simply refuses to do?

Prime Minister Chastanet did give some level of assurance that St. Lucia will get off the EU blacklist when he said on Wednesday that government held a conference call with European Union officials on Monday about the matter. He said that a commitment letter from St. Lucia will soon be on its way to the Council of the European Union in Brussels, outlining St. Lucia’s intention to either abolish or amend legislation that the EU considers need to be worked on.

But for the Prime Minister to suggest that a process has started to get St. Lucia off the EU blacklist is not enough. The Prime Minister has failed to tell St. Lucians how St. Lucia got itself on the blacklist in the first place. To say that “We found out at the end of October that we were on the blacklist” gives the impression that the government was caught with its pants down.

Said the Prime Minister: “At that point, the European Union said they wanted to receive a letter of commitment that we would abolish or amend certain legislation that we have without providing any level of detail as to what that was.”

Based on the Prime Minister’s comments, it appears that the government wanted to negotiate with the EU over its blacklisting of St. Lucia and, as a result, missed an opportunity to do what it was asked to do to get off the list at the same time as Barbados and Grenada.

Now that the government realizes that it has no choice but to do as told by the EU, it is reluctantly getting on the path to de-listing because how else is the commitment letter asked of by the EU still in a draft stage seeing that the commitments asked of St. Lucia by the EU were requested many months ago.

It was on the May 25, 2016 that the Council of the European Union agreed on the establishment of an EU list of third country non-cooperative jurisdictions for tax purposes and on November 8 of that same year that it set out the criteria on tax transparency, fair taxation and implementation of anti-BEPS (Base Erosion and Profit Strategy) standards, as well as the guidelines for the process of screening jurisdictions with a view to achieving this objective.

On December 5 last year, the Economic and Financial Affairs (ECOFIN) Council of the Council of the European Union adopted the EU list of non-cooperative jurisdictions for tax purposes. More specifically, it endorsed the EU list of non-cooperative jurisdictions for tax purposes as well as recommended to the concerned jurisdictions on steps to take in order to get de-listed.

Further to that, the Council, on December 5 last year, deemed it appropriate for the Code of Conduct Group of the EU to engage in discussions with the listed jurisdictions with a view to agreeing and monitoring the steps that jurisdictions are expected to take in order to be removed from the list.

The General Secretariat of the Council of the European Union stated that “since December 2017, several new commitment letters signed at high political level by jurisdictions were received by the Code of Conduct Group. These letters were assessed and delegations agreed, through silence procedure that based on the specific commitments made through these letters the following jurisdictions should be moved from Annex 1 to Annex 11 of the Council conclusions.”

The jurisdictions moved were Barbados, Grenada, Korea, Macao SAR, Mongolia, Panama, Tunisia and the United Arab Emirates. What has St. Lucia been doing all this time?

It would be in the interest of the Government of St. Lucia to quickly do as the EU says or be further alienated in a world where size of country and underdevelopment are not enough for economic and technical assistance from richer and more developed nations.