TCI races to get off EU’s blacklist

Cabinet greenlights funding for IT portal strategy

TCI’s Cabinet has approved funding for an information technology platform to comply with the European Union’s tax benchmarks with the aim of enhancing the territory’s chances of getting off the blacklist.

This comes as the Turks and Caicos Islands race to demonstrate sufficient cooperation with the European Union’s tax standards before October 2023.

Her Excellency the Governor (Acting), Anya Williams chaired the 16th meeting of Cabinet on Wednesday 14 June 2023, at the Bellfield Landing on North Caicos.

At this meeting, Cabinet approved a contract extension and amendment for Economic Substance Consultancy to provide advice, assistance, and an IT portal strategy in regard to the removal of the Turks & Caicos Islands from the EU list (“EU blacklist”) of non-cooperative jurisdictions for tax purposes.

Members also approved funding for the IT Portal Strategy, according to a post-Cabinet statement.

The approval of a new IT platform for the Exchange of Information (EOI) department, is part of a myriad of measures to make the territory a more compliant jurisdiction as it relates to the global fight against money laundering and countering the financing of terrorism (or AML/ CFT).

The EU’s blacklist is a controversial tool used to tackle tax fraud or evasion: illegal nonpayment or underpayment of tax, tax avoidance: use of legal means to minimise tax liability and money laundering: concealment of origins of illegally obtained money.

Minister of Finance Investment and Trade, Hon Erwin Saunders earlier this year announced that the Government has earmarked $2m to procure the new Information Technology (IT) platform.

According to the Minister, the IT platform will allow the jurisdiction to have a more robust automatic exchange of information solution, an area that has been deemed ineffectual by the European Union (EU).

“Last October 2022 - the European Union (EU) added our Islands to its blacklist of tax havens, claiming that we are noncooperative on matters related to tax.

“While we disagree with the findings, we do recognise that we are deficient in some areas, particularly around the IT platform that facilitates the collection of the required information and the exchange of that information.”

The new IT platform will increase legitimacy by reinforcing the territory’s commitment to international tax standards.

Further, it shows that the territory is indeed a “cooperating partner” with the EU for tax purposes, which will go a long way towards improving TCI’s reputation as a responsible financial centre, Saunders added.

He further explained that the automatic exchange of information will help to improve overall compliance by registered entities, as it will make it more difficult for them to avoid meeting the reporting requirements.

“Automatic exchange of information will increase transparency and accountability for our jurisdiction, which will help to remove the perception that we are “non-cooperating”.

“By complying with international tax standards, we will accelerate our removal from the EU “blacklist for tax purposes” and avoid us being put back on it in the future.

“By complying with international tax standards, our jurisdiction will become more competitive in the global financial market, as we will attract new investors and clients that are looking for a stable and reliable financial centre.”

The TCI becoming fully compliant with the EU's tax standards has several potential benefits for our jurisdiction especially as it relates to growing the territory’s presence on the global financial market, the Finance Minister stressed.

On Tuesday, October 4, 2022, the European Council blacklisted the Turks and Caicos Islands for the first time.

The Council explained that the reason for adding the Turks and Caicos Islands, Anguilla and The Bahamas to the list is that there are “concerns that these three jurisdictions, which all have a zero or nominal only rate of corporate income tax, are attracting profits without real economic activity.

The EU Blacklist is due to be revised in October 2023.

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