Three Offshore Centres Face Tax Compliance Sanctions

Three Offshore Centres Face Tax Compliance Sanctions

Jersey, Bermuda and the British Virgin Islands have reacted with shock on being been ‘yellow-carded’ by France over tax misdemeanours.

Each financial centre is now on a French blacklist of uncooperative tax jurisdictions – but no one seems to know the reason why.

The French statement gives no reason for the sanctions and seems to suggest that no action will be taken until January 2014 to allow each centre to comply with France’s requests for tax information.

The three join seven financial centres already on the list: Botswana, Brunei, Guatemala, Marshall Islands, Montserrat, Nauru and Niue. The Philippines has been removed.

However, no one seems to know why the three financial centres have been included.

Seeking clarification

“The government is surprised that Bermuda is included in France’s list, particularly as Bermuda has an existing tax exchange of information agreement with France,” said a government spokesman.

“Bermuda has contacted the French government seeking clarification to try and pinpoint the problem and correct this issue.”

Bermuda also acts as the vice chair of the Organisation for Economic Co-operation and Development (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes.

British Virgin Islands premier Dr D Orlando Smith expressed shock at entry on the blacklist.

“As far as I am aware, British Virgin Islands has complied with requests for tax information from France,” he said. “We have done what was necessary. We have a tax exchange treaty with France and agreed to share tax information with other European Union countries.

“We are doing everything asked and I am astonished we are on this list.”

Jersey Finance chief executive Geoff Cook said the announcement was ‘frankly astonishing’. Jersey Finance is the trade body for the Channel Island’s finance institutions.

Blacklist sanctions

“France suggests Jersey is “uncooperative” on tax information exchange. This is ludicrous given our record as a tax sharing jurisdiction.”

Jersey has also played a leading role in OECD tax work in recent months.

Reports suggest that each country is on the blacklist for filing to answer tax information requests; although no official statement has been released by any of the four nations to confirm this.

One report, filed by Reuters, claims the British Virgin Islands failed to answer 10 information requests from the French tax authorities.

The consequences of France imposing blacklist sanctions includes up to a 75% withholding tax on companies sourcing income in France or on income passing through French financial institutions.

 

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Three Offshore Centres Face Tax Compliance Sanctions

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