Offshore jurisdictions protest as Netherlands puts them on blacklist
The Bahamas call it “premature”, the Cayman “unjustified”, in the eyes of the Bermuda government it is “unfortunate” and the Isle of Man was caught by “surprise”. Offshore jurisdictions from all over are protesting as the Dutch puts them on blacklist.
The chief minister Howard Quayle sees no explanation for the inclusion of the Isle of Man on that list.”I was pretty surprised by that. It was a little bit bizarre, I mean the Isle of Man has a better regulatory rating than the Netherlands so I’m surprised at their actions”.
“Obviously this happened over the holidays period so I haven’t been able to speak to to their officials to see where this is coming from,” he told Manx Radio.
“The decision made by the Dutch Government to include Bermuda on their low-tax jurisdictions in unfortunate.”
Treasury minister Alfred Cannan told the same news outlet he believes the move is more about Holland putting its own house in order rather than an attack on the Island.
Jersey and Guernsey are also included but the Caribbean island of Curaçao – a constituent country within the Kingdom of the Netherlands – is not.
He said the new measures have been well trailed and seek to prevent aggressive profit shifting. “Let’s remember very clearly: The Dutch have been top of the pops when it comes to facilitating and allowing a corporate shifting of international profits,” Cannan added.
In the Caribbean, the Dutch decision has caused some backlash. The Cayman Islands government issued a statement saying it “regrets” that the Netherlands had chosen to break from other EU member states by establishing its own “blacklist” of 21 jurisdictions, including the Cayman Islands.
On Dec. 28, the Dutch ministry of finance released a tax list of 21 jurisdictions aimed at preventing companies from avoiding tax by moving mobile assets to low-tax jurisdictions.
From 2021, a withholding tax of 20.5% will be levied on interest and royalty payments from the Netherlands to entities in listed jurisdictions. The list will also be applied to a number of other cases and transactions.
In a statement issued by the Premier’s Office Friday, the government said the list was based on the sole criterion of those jurisdictions having a lower corporate tax rate than any EU member state.
All of the countries on the list have a corporation tax rate of less than 9 percent, while some, like Cayman, have no corporation and income tax at all.
“This ‘blacklisting’ does not take into account Cayman’s demonstrated adherence to international standards for tax transparency, or participation with the OECD’s BEPS Inclusive Framework, and ignores our engagement with the EU’s Code of Conduct Group over the last two years to address their concerns regarding economic substance,” the statement said.
The government rejected the blacklisting as “unjustified” and “lacking in fairness and credibility.”
“It is unfortunate that the Netherlands has chosen to attempt to divert criticism of its own tax practices by attacking the legitimate tax regimes of other jurisdictions,” the statement continued.
The Bahamas “will have some serious concerns” if its inclusion on a Dutch “blacklist” means European Union (EU) countries are going further than the bloc’s own anti-tax evasion offensive.
KP Turnquest, deputy prime minister, told local news outlet Tribune Business that the government had already mobilised its diplomatic contacts in a bid to discover the rationale for the Netherlands “unusual” action.
He added that its decision to include The Bahamas on a list of 21 “low-tax jurisdictions”, which were singled out on the basis that they have no or low corporate income tax rates below nine percent, was especially troubling given this nation’s efforts to comply with the anti-tax evasion demands of the 28-nation EU – of which the Netherlands is a prominent member.
Turnquest said The Bahamas’ passage of legislation to remove preferential tax breaks for foreign investors, and require entities that are part of multinational corporate networks to have “substance” behind their presence here, would effectively be rendered meaningless and worthless if individual members went beyond the bloc’s own standards like the Dutch.
In Bermuda, a ministry of Finance spokesperson stated: “The decision made by the Dutch Government to include Bermuda on their low-tax jurisdictions in unfortunate.
“The government of Bermuda has had a Tax Information Exchange Agreement [TIEA] in place with the Netherlands since June 2009 and we are complaint in all areas of transparency and exchange of tax information. The Ministry of Finance will work to address the Dutch Government’s concerns.”
The Dutch blacklist contains five jurisdictions currently blacklisted by the EU: American Samoa, the US Virgin Islands, Guam, Samoa, and Trinidad and Tobago. However, it now includes another 16 low-tax jurisdictions: Anguilla, the Bahamas, Bahrain, Belize, Bermuda, the British Virgin Islands, Guernsey, the Isle of Man, Jersey, the Cayman Islands, Kuwait, Qatar, Saudi Arabia, the Turks and Caicos Islands, Vanuatu and the United Arab Emirates.