13/03/23

TURKS AND CAICOS: Government to procure a new IT platform to comply with EU tax standards.

As published on tcweeklynews.com, Friday 10 March, 2023.

The Turks and Caicos Islands Government has earmarked $2m to procure a new Information Technology platform for the Exchange of Information (EOI) department, in a bid to comply with the European Union’s tax benchmarks.

According to the Minister of Finance Investment and Trade, Hon Erwin Saunders, the new 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).

The funds were allocated during the third Supplementary Bill tabled by the Minister of Finance on Tuesday, February 28, 2023.

"Last October 2022 - the European Union (EU) added our islands to its blacklist of tax havens, claiming that we are non-cooperative 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.”

He explained that 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 said: "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.

Some of the significant benefits for the jurisdiction include increased economic activity, revenue, diversification, enhanced reputation, and improved infrastructure.

He said: "A growing financial industry will help to increase economic activity in our islands by creating jobs, attracting investment, and increasing demand for our services.

"A growing financial industry will help to increase government revenues through taxes, fees, and other charges associated with financial activities.”

Saunders posited that the financial industry will also help to diversify the local economy, reducing its heavy reliance on tourism, construction, and stamp duties and help to enhance TCI’s reputation as a stable and reliable financial centre, "which will attract more investors and increase confidence in our jurisdiction”.

"A growing financial industry will also help to improve overall infrastructure, including technology, and telecommunications, which will have positive spillover effects on other industries.”

On Tuesday, October 4, 2022, the European Council published its biannual list of non-cooperative jurisdictions blacklist (Annex I) and (Annex II –a so-called "grey list”) for jurisdictions that have met some but not all of the benchmarks.

The Turks and Caicos Islands was listed for the first time.

According to the EU, the list of non-cooperative jurisdictions for tax purposes is a tool to tackle tax fraud or evasion: illegal non-payment or underpayment of tax, tax avoidance: use of legal means to minimise tax liability and money laundering: concealment of origins of illegally obtained money.

The council explained that the reason for the inclusion of Turks and Caicos Islands, Anguilla, and The Bahamas in 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 (criterion 2.2 of the EU list).