The Federation of Saint Kitts and Nevis’ Response to EU Listing of Non-Cooperative Jurisdictions for Tax Purposes

Saint Kitts and Nevis, BASSETERRE –Today 13 March 2018, the Economic and Financial Affairs (ECOFIN) Council of the European Union (EU) adopted the Council’s conclusions on the EU’s list of non-cooperative jurisdictions for tax purposes. Three Caribbean jurisdictions, namely The Bahamas, Saint Kitts and Nevis and the US Virgin Islands, were listed.

In December 2017, four Caribbean jurisdictions (Barbados, Grenada, Saint Lucia and Trinidad and Tobago) were named on the EU’s list of non-cooperative jurisdictions for tax purposes. Barbados and Grenada were removed from the list in January 2018.

The EU previously indicated that its determination of whether a country is cooperative for tax purposes would be based on three criteria including Tax Transparency, Fair Taxation and Implementation of Anti-BEPS Measures. In the case of St Kitts and Nevis, the only area of concern from the EU is in respect of: Fair Taxation where (a) a jurisdiction should have no preferential tax measures that could be regarded as harmful and (b) a jurisdiction should not facilitate offshore structures or arrangements aimed at attracting profits which do not reflect real economic activity in the jurisdiction.

Saint Kitts and Nevis was cited for what the EU considers a “preferential tax regime”, which refers mainly to the existing tax regime with respect to the provisions for offshore companies. During the process of engaging with the EU, concrete commitments were made by the Federation to amend the relevant legislation to address the EU’s concerns. The Federation remains optimistic that these commitments will persuade EU’s partners to remove the Federation from the list of non cooperative jurisdictions for tax purposes and allow for a framework of cooperation and dialogue moving forward. Saint Kitts and Nevis does not consider itself to be non-cooperative.

On the contrary, the Federation remains committed to the international standards on transparency and exchange of information for tax purposes as evidenced by a Largely Compliant rating by the Organization for Economic Co-operation and Development (OECD).

Further, Saint Kitts and Nevis has continued to expand its exchange of information network and is a signatory to the Multilateral Convention on Mutual Administrative Assistance for Tax Matters (“the Convention”). St Kitts and Nevis signed and deposited the instrument of ratification for the Convention on August 25, 2016. Additionally, legislation was passed by the National Assembly in December 2016 to provide for the implementation of the CRS.

The Federation also joined membership of the BEPS Inclusive Framework in November 2017 and is among 112 other jurisdictions that have committed to implementing anti-BEPS measures. Important members of the EU such as Italy, Greece, Poland and Estonia have also during the period 2016-2017 removed St. Kitts and Nevis from their national lists of non cooperative jurisdictions signifying their satisfaction with the Federation’s efforts on transparency and exchange of information.

Based on the commitments given by Saint Kitts and Nevis to date, it is clear that Saint Kitts and Nevis is a committed and fully cooperative jurisdiction in the context of international tax transparency. In addition, in respect of the commitments specifically given to the EU, we anticipate a series of actions to be taken to ensure that Saint Kitts and Nevis addresses the EU’s current concerns within the stipulated timeframe of 31 December 2018.

In this regard, Saint Kitts and Nevis will undertake a comprehensive review of its legislation with a view to addressing any deficiencies including amending relevant legislation in accordance with best practice in international tax matters. Consequently, the Government of Saint Kitts and Nevis will ensure that stakeholders within the Financial Services Sector and the wider general public will be consulted as we endeavor to maintain a strong and vibrant Financial Services Sector