Brexit Fallout: EU May Blacklist BVI & Other Tax Havens

Negotiations are expected to be tough as the Territory’s mother country – the United Kingdom (UK) – approaches another round of discussions for its break from the European Union (EU) commonly known as BREXIT. These negotiations are supposed to be exacting for the UK because of alleged plans by the EU to use the British Virgin Islands and its sister Overseas Territories (OT’s) as leverage against the UK.

The alleged proposed EU option of blacklisting territories like the BVI was mentioned in an article that was published by the UK’s Independent newspaper on 14 January. The article stated that as the UK heads to the negotiations table the possibility of its territories being added to a blacklist looms.

The newspaper disclosed that its sources in the European Union Commission disclosed that the EU Council members are contemplating whether UK Overseas Territories which were not previously included on the EU tax haven blacklist should now be added.

Although it was pointed out that this proposed review is not directly linked to BREXIT, the fact that the suggestion is floating around when the talks are resuming are being looked upon as mere coincidence.

The foreboding news of possible EU blacklisting can be seen as disheartening in consideration of the fact that Premier and Minister of Finance, Dr. the Hon. D. Orlando Smith travelled to London two months before hurricane Irma struck the Territory to put forward the BVI’s aspiration for its future relationship with the European Union following BREXIT. At that meeting the BVI Leader even outlined the global opportunities that can be realized with such a relationship.

The Premier’s post-Brexit vision for the Territory was expressed at the UK-OT Joint Ministerial Council on EU Negotiations that were held on 12 July with UK Government ministers.

However, in the 14 January Independent newspaper article penned by Joe Watts, and Andrew Grice it was noted that the matter of the EU and the Overseas Territories will put the United Kingdom in a precarious situation: “One official made clear the EU would “go after” them, while another said the UK Government must ask itself if it wants to fly in the face of British public opinion on tax avoidance,” the article stated.

It was mentioned that British Overseas Territories were spared from the blacklist of uncooperative tax jurisdictions which was compiled by the European Commission in December. The recent blacklist was said to include jurisdictions suspected of evasion and avoidance. Furthermore, the list is said to be a tool aimed at tackling “threats” to member states’ tax bases and take on “countries that consistently refuse to play fair”.

Some 17 jurisdictions were blacklisted, and the article stated that no British Overseas Territories or Crown Dependencies was listed “despite them being named in earlier EU lists and some being implicated in the Paradise Papers scandal.”

The unfortunate circumstances of what hurricane Irma did to the British Virgin Islands was said to have been taken into consideration by the EU, but it was explained that the hurricane merely delayed the process. “The EU had agreed the blacklisting screening process would be put on hold for territories caught in Hurricane Irma, meanwhile the UK is said to have pushed back against tougher sanctions for blacklisted territories. But officials confirmed to The Independent that the screening process will now restart in “early spring” for British territories including Anguilla, the British Virgin Islands and the Turks and Caicos Islands.”

Further the Independent newspaper said that it was informed that the blacklisting decision will be an independent one: “Spokespeople at the European Commission said decisions on which jurisdictions to blacklist would be taken according to a strict and public criteria, not subject to any political pressure or consideration in Brexit negotiations.”

Nonetheless, it was indicated that some members of the EU have different views on the matter: “With the crucial Brexit trade talks to start in March, some officials privately acknowledge the dynamic is shifting, with the EU potentially using the process as leverage and vowing to pursue the territories for revenue post-withdrawal.”

The newspaper said that its European Commission source pointed out that it was “significant” that none of the territories were mentioned in the joint EU-UK report setting out the phase one Brexit agreement last month… “They went on: “The UK has always protected them in the past. That is not going to happen in future. We will go after them,” the article stated.

Meanwhile the UK government is still adamant that Brexit is a good thing, but would not allow a second referendum possibly fearing the outcome; however, many people in the UK and elsewhere view Brexit as a can of worms and the stupidest thing of the millennium – the saga continues as the damage to the UK economy increases by the hour.

The post Brexit Fallout: EU May Blacklist BVI & Other Tax Havens appeared first on Island Sun.