Tuesday, 5th November 2024

St Kitts-Nevis manages to evade EU's revised tax blacklist

Friday, 15th March 2019

St.Kitts and Nevis is not a name to be found on the European Union’s latest list of non-cooperative jurisdictions for tax purposes.

It is believed that three steps taken by St. Kitts and Nevis’s Team Unity administration are behind the EU’s decision.

1) Joining the Inclusive Framework on the Base Erosion and Profit Shifting (BEPS) in November 2017

2) Attaining a Largely Compliant rating by the OECD Global Forum for the exchange of information on request

3) and the passing of key legislation including in the National Assembly, the Companies (Amendment) Act 2018, in the Nevis Island Assembly, the Nevis Business Corporation (Amendment) Ordinance 2018 and the Nevis Limited Liability Company (Amendment) Ordinance 2018

These three steps have gone a long way to addressing the EU’s concerns with regards to St. Kitts and Nevis’s arrangements. The move does not have St. Kitts and Nevis entirely in the clear, however. The EU will keep monitoring St. Kitts and Nevis via the Code of Conduct Group to ensure that the high-level commitments made to the EU regarding fair taxation and international tax good governance policies are fulfilled in 2019.

A Government statement said that, in addition to the monitoring, “we anticipate further actions to be taken to ensure that St. Kitts and Nevis complies with new criteria identified by the EU by December 2019. In this regard, St. Kitts and Nevis continues to undertake the review of its legislation with a view to addressing any deficiencies including amending relevant legislation in accordance with best practice in international tax matters.”

The statement promised consultations with the financial sector as well as the wider general public in order to “maintain a strong and vibrant Sector”. How exactly such a consultation will be implemented in line with EU guidelines is uncertain.

In concluding, the Government statement said that “St. Kitts and Nevis has never considered itself to be non-cooperative. The fact that St. Kitts and Nevis was not named on the EU revised list of non-cooperative jurisdictions is indeed a proud achievement for the Federation.

Notwithstanding being a small island nation in a playing field littered with larger and more powerful nations, St. Kitts and Nevis continues to remain resolute in its commitment to strengthen and uphold the highest principles of fair taxation despite the many challenges that confront the Federation.”

This news will be welcomed by many in St. Kitts and Nevis and beyond. They will see it as a reaction from the EU to the strong statements made by CARICOM leaders at the end of last month. This could be interpreted as a major achievement for CARICOM and a big vindication for Dr. Timothy Harris’s leadership.

Critics will argue that the removal being entirely on EU terms goes against the strong statements made at the CARICOM conference. The continued monitoring and the adhering to the EU’s tax criteria will be alarming for many who will see this as outside interference with St. Kitts and Nevis’s affairs. There will also be worries that the EU could put St. Kitts and Nevis on the blacklist in the future on a whim.

For now though, this is very much a win for Prime Minister Harris and such immediate action following his strong warnings at CARICOM is a sign that Mr.Harris’s leadership is effective on an international stage.