Two senior Guernsey government officials have strongly contested the offshore jurisdiction's placement on the European tax blacklist.

Action by the European Commission to put a raft of offshore financial centres on an "uncooperative" blacklist drew criticisms from some of the affected financial centres late last week as they raised questions about the EU's methodology.

Guernsey’s chief minister, deputy Jonathan Le Tocq, expressed his “disappointment and surprise” that the island has been included on a new European Commission list of 30 “non-cooperative” non-EU jurisdictions. In a separate statement (see below), Bermuda criticised the way the EU decided to put jurisdictions on the list.

In its commentary, Guernsey Finance said that the Commission's list comprises national tax "blacklists", including any jurisdiction on 10 or more EU member states’ lists. Guernsey's commerce and employment minister, deputy Kevin Stewart, said the list was “very odd indeed” given that they had informed the Commission that Guernsey is only on nine lists, as are the Isle of Man and Gibraltar.

Le Tocq said he had written to commissioner Moscovici today to express Guernsey’s disappointment and surprise and to ask to have Guernsey removed from it as soon as possible. 

“It is this type of arbitrary and inconsistent use of ‘blacklists’ that international standards are supposed to be replacing, so this seems to me to run counter to what the Commission itself is trying to do on tax transparency. It also runs counter to commissioner Moscovici’s own positive views on Guernsey, which we discussed just over a month ago,” he said in a statement.

“The fact remains that we lead a number of EU member states on tax transparency and cooperation, and we will be partners of the EU in the automatic exchange of information under the Common Reporting Standard.” 

Guernsey Finance, the promotional agency for the offshore jurisdiction’s finance industry internationally, said in the statement that important factors had been overlooked in Guernsey's inclusion. It highlighted that Guernsey had voluntarily adopted the EU Savings Directive and moved to automatic exchange of information back in 2011, and that it had also adhered to the code of conduct on business taxation.

Bermuda
Separately, the government of Bermuda voiced its criticism of being included on the European Commission’s list of allegedly uncooperative locations.

“The criterion for inclusion was if 10 or more EU member states had listed a country on their national blacklist. Eleven EU member states have Bermuda on their national blacklist,” E T Bob Richards, minister of finance, said in a statement late last week.

“Bermuda has signed a large number of tax information exchange agreements with countries around the world and today has 80 treaty partners because of signing the Multilateral Tax Convention (a multilateral TIEA),” Richards said.

“Those 80 partners include all G20 countries, all OECD countries except for one, and all EU countries except for two because those three countries have not yet signed the international standard on tax matters, the Multilateral Convention,” Richards said. 

Those jurisdictions deemed uncooperative are, in alphabetical order: Andorra, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Grenada, Guernsey, Hong Kong, Liberia, Liechtenstein, Maldives, Marshall Islands, Mauritius, Monaco, Montserrat, Nauru, Niue, Panama, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Seychelles, Turks and Caicos Islands, US Virgin Islands, Vanuatu. 

Richards added: “But at least five of those 11 EU member states that have us on their national blacklist have not performed their obligations in one way or the other. Two of the five were to give beneficial recognition to the Multilateral Tax Convention in their blacklist criteria, one is still in the process of considering recognition of the Multilateral Convention, one has not kept their promise to send Bermuda documents to sign to take us off their list, one which is one of the two EU member states I earlier mentioned has not even signed up to the Multilateral Tax Convention, and one publicly announced earlier this year that it had taken Bermuda off its blacklist."

“We have been waiting for their cooperation. It is surprising then that we would be labelled as `uncooperative’,” Richards said, arguing that the EU’s approach is flawed.

“To be included on this new `uncooperative’ list, one would have to be `blacklisted’ by 10 or more EU member states, not nine, eight, seven or six. Why did they use 10? [It] speaks to lack of transparency. Not all EU members agree on how they compile their blacklists,” he said.

“Some are based on a combination of tax transparency concerns and low tax rates; others are triggered by low tax rates alone, and some are triggered by a lack of a tax information exchange agreement,” Richards said, adding: “Domestic tax policy is recognised by the UN, WTO, IMF, the OECD and the G20 as a jurisdiction's sovereign right to implement. Any national list whose trigger includes low or no income tax should be disqualified.”  

(Editor's note: Guernsey's complaint that it is only on nine EU states' lists of uncooperative jurisdictions - if we have read its statetment correctly - suggests that the Commission's methodology might be debateable. But being on nine countries' lists is still nine too many; this and other jurisdictions can complain as much as they wish about the unfairness of all this - and they have some grounds to do so - but there is plainly some work to be done in allaying fears.)