Tax blacklisting criticised

Tuesday June 30, 2015 Written by Published in Economy

THE blacklisting of the Cook Islands by the European Union’s executive commission as one of the world’s tax havens has been criticised by an Australia-based academic.


Anthony van Fossen, an adjunct research fellow at Griffith University who specialises in tax havens, says the blacklist is arbitrary and poorly constructed.

The Cook Islands is one of the 30 countries blacklisted by the commission for not doing enough to crack down on tax avoidance.

The other Pacific countries listed by the EU include Niue, Nauru, the Marshall Islands and Vanuatu.

In an interview with Radio New Zealand, van Fossen says the list was an ‘artificial’ exercise in that it was compiled simply by listing the countries that are judged non-compliant with good tax governance by 10 or more EU states.

He says there in an element in the listing that suggests that it picks on the weaker countries.

“And the list is very strange in that some major havens are ignored, particularly those in the European Union itself and many minor havens including some in the Pacific islands are highlighted.

“The Cook Islands and Vanuatu are significant tax havens. But another odd thing about the list is that Samoa, which is a much more important haven than either the Cook Islands or Vanuatu, is not listed. So the criteria seem to be rather arbitrary.”

He says countries which are on the blacklist may face some repercussions.

“Blacklists are never desirable things to be on and this blacklisting certainly doesn't help. So there is some reason to be worried, because many people who are potential clients will look at the list and decide to be very wary of doing business with countries that are on it.”

In an earlier interview with CI News, Cook Islands’ Financial Services Development Authority chief executive Tamatoa Jonassen said the blacklist was ‘inexplicable’ in terms of transparency and information sharing.

Since 2009, the Cook Islands has signed tax information exchange agreements (TIEA) with 20 countries, half of which are member countries of the EU

The EU blacklist is made up of countries that figure on at least 10 national lists of tax havens compiled by the 28 member nations.

It is part of a crackdown on multinational companies trying to avoid paying tax.

EU Economic Affairs Commissioner Pierre Moscovici says publication of the blacklist is a decisive step that will push non co-operative non-EU jurisdictions to be more cooperative and adopt international standards.

The full list is: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, Panama, Saint-Vincent and the Grenadines, Saint Christopher and Nevis, Turks and Caicos Islands, U.S. Virgin Islands, Andorra, Guernsey, Liechtenstein, Monaco, Liberia, Mauritius, Seychelles, Brunei, Hong Kong, Maldives, Cook Islands, Nauru, Niue, Marshall Islands and Vanuatu. 

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