On 2 December 2019 Gerald Darmanin, French Public Accounts Minister, announced that France is adding Anguilla to its blacklist. It appears this will come into effect on 1 January 2020. The present list includes Panama, Trinidad and Tobago, the US Virgin Islands, and twelve other countries. Now, they will add Anguilla, the Bahamas, the British Virgin Islands and Seychelles. This French blacklist is additional to the EU list, which does not include Anguilla.
But why is Anguilla being put on the French blacklist when the EU appears to be satisfied with our compliance?
Generally, reasons for being on a European blacklist include classification of the country as an offshore regime; lack of tax transparency; base erosion and profit shifting (BEPS) measures; or failure to investigate foreign aid fraud. Although we do incorporate IBCs, we have not been a significant offshore regime for years. More tax-free companies are formed in the State of Delaware or the City of London in a day than are formed in Anguilla in a decade. Our taxes are heavy and transparent. Anguilla signed on to BEPS in March 2018, and since then we have continued to implement BEPS minimum standards. We have received no request to investigate foreign aid fraud.
Being on the French blacklist will result in certain additional punitive measures. These include an enhanced withholding tax rate of 75% and rebuttal of application of the French participation exemption regime. If you are a Frenchman living in Anguilla, your dividends will be taxed at 75%. There will be a direct impact on your relationship with the French banking sector. Your French bank will not permit you to transfer money that you need to live on, to pay your children’s school fees, or to conduct your business. French tourists will not be able to access their funds through a local ATM or pay their restaurant and hotel bills with credit cards.
Other measures will include new liabilities for e-commerce platforms; enhanced penalties in relation to tax fraud cases; a ten-fold increase in penalties for auditors, banks, tax lawyers, tax advisers and other intermediaries accused of helping to put into effect certain fraudulent schemes and operations (and the burden of proof is shifted to the intermediaries to prove their innocence); the introduction of a naming and shaming process; and new plea and transactional procedures in tax fraud cases.
Jurisdictions can get added to the French blacklist if they do not provide information quickly enough, thus complicating tax investigations. Or, the information provided may be insufficient. France has been carrying out investigations into 500 companies following the Panama Papers scandal which exposed illegal practices in the offshore finance industry. It seems 15% of the 500 cases were registered in Seychelles. It is not known what percentage, if any, were registered in Anguilla.
All efforts to find out from official sources the reason for Anguilla being on the blacklist have proven futile. Some insight may be derived by looking at the published information concerning other French blacklisted countries.
Panama was originally on the French National List of Uncooperative States and Territories (ETNC), but it was removed in 2012 when it became fully compliant with EU demands. It was returned to the list in 2016 after the release of the Panama Papers. Despite the efforts of its government to explain that the Panama Papers is ancient history, it remains on the ETNC.
The official reason for including Seychelles on this list is the lack of information about some companies previously requested by French tax inspectors. It is not known whether Anguilla has failed to respond to information requested by the French.
In 2017 American Samoa and Guam were added to the EU blacklist for failing to apply automatic exchange of financial information; not signing and ratifying the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters; not applying the BEPS minimum standards; and failing to commit to addressing these issues by 31 December 2018. They got themselves removed from the blacklist but have now been reinstated. Presumably, this is because they failed in their undertakings. It is not known if Anguilla is in the same category of failure.
The official reason France has given for adding the Bahamas to the blacklist is its failure to respond to requests for information in a manner that is satisfactory to them. Yet, there is not a single French tax-information request to the Bahamas that remains outstanding or that has not been dealt with. Additionally, France has announced this action while failing to invoke the dispute-resolution process contained in the relevant Convention. The Bahamas Minister of Finance has been raging against France’s announced move. What is the point in us engaging in these multilateral organisations if individual members take unilateral action without dialogue?
Could the answer to the question at paragraph two above be that, because we have no direct income tax, we are thought of as a tax haven, an offshore regime? Never mind that our customs duties, other indirect taxes, government fees and public utility charges are among the highest in the world! Everything we consume must be imported from outside. Just last month, the Water Corporation of Anguilla increased the cost of using 999 gallons from $40.00 to $72.98. With new environmental levies imposed on us, even the air we breathe now seems to be taxed.
Could it be our failure to implement a register of beneficial ownership? The Europeans have long threatened the British for failing to force us to establish such a register. Meanwhile, a 2018 study by Transparency International reveals that the project is a failure in Europe. While companies in Europe are obliged to enter names on the register, no G20 country is properly implementing the High-Level Principles on Beneficial Ownership. No European country has the capacity to verify the information on their register. Without the ability to do this, the information by itself is useless. What, other than bullying, is the point of imposing this on Anguilla.
We know that Boris is responsible for making any declaration of war on Anguilla’s behalf. But elections and Brexit have him distracted. Meanwhile, can we ask our Premier to tell Gerald Darmanin to stick one of his new Barracuda-class submarines where it hurts? At least, threaten him with a yellow vest!
Whatever we do, it appears there are more woes in sight next year for Anguilla’s embattled banking and financial system.
https://donmitchellcbeqc.blogspot.com/2019/12/anguilla-blacklisted.html
