Small states, including those in the Caribbean, are justifiably troubled by the continuous efforts by the member states of the Organization for Economic Co-operation and Development (OECD) to cripple every initiative they take in the financial services sector.
Indeed, it is true to say that the OECD has become as intimidating and odious an acronym as the IMF was in the 1970’s and 1980’s.
Under the guise of stopping financing of terrorism and money laundering, the OECD has extended its reach that strangles the rights of sovereign states, and stifles their efforts in almost every area of finance and banking.
Picking-off these small states, one after the other, the OECD has effectively imposed its will on all of them, so much so that when governments acquiesce to the demands of the OECD or the Commission of the European Union (whose members constitute most of the membership of the OECD), their representatives claim it as a victory.
More than one Caribbean government has trumpeted their signing-up to the OECD or EU Commission demands as some sort of virtue while, indeed, they agree to remove all incentives from international business corporations, causing them to shut down, and, thus, depriving their countries of desperately needed revenues.
There has been – and sadly remains – a lack of solidarity among all the affected countries. So, there is no effort to pool their intellectual knowledge and experience to create a solid negotiating position which they could jointly adopt with the OECD. Even in the OECD Global Forum, which is dominated by the OECD countries with the nominal participation of small states, there is no effort by the small jurisdictions to develop a single position and to adopt a joint negotiating strategy.
Now, the OECD is going after “residency” programmes and “Citizenship by Investment Programmes (CIPs)” in the Caribbean and elsewhere.
This new assault will affect half the member states of the Caribbean Community (CARICOM). Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia operate CIPs, and The Bahamas and Barbados have residency-by-investment (RBI) programmes.
On February 19, the OECD issued a “consultation document” on preventing the abuse of residence by investment schemes to circumvent reporting on the financial assets of their nationals.
Despite the fact that thousands of people subscribe to these programmes for legitimate reasons, the OECD argument is that the programmes could create opportunities for tax evaders.
The OECD is now soliciting public information to get evidence on the misuse of the CBI/RBI schemes and on effective ways for preventing such abuse. They will get organized testimony from organizations that are dedicated to high taxation. The stage is already set for a conclusion that the CBI/RBI programmes are porous for tax evasion and other forms of financial crime, and, therefore, the OECD should require jurisdictions to discontinue them or face “counter measures”.
The paper can be read in full at https://www.oecd.org/tax/exchange-of-tax-information/consultation-document-preventing-abuse-of-residence-by-investment-schemes.pdf