Exclusive: Guernsey chief minister defends island’s tax credibility

Guernsey chief minister Jonathan Le Tocq has defended the island’s position as an “international leader” in tax cooperation after it was placed on the European Commission’s tax haven blacklist last month.

Speaking exclusively to International Adviser, Le Tocq described the list of the 30 most un-cooperative tax jurisdictions as “arbritary” and questioned the legitimacy of combining unspecific lists from a variety of EU jurisdictions.

“It doesn’t make sense for Guernsey to be on the list for a variety of reasons,” he said. “In particular, because we do not appear on the arbitrary figure of 10 lists; that isn’t even half of all the EU countries.

“Lots of jurisdictions have these so-called blacklists and they mean different things. Some are updated regularly, and some are not; some are done on the basis of cooperation, some are not; and some are even politically motivated.

“When you pile everything together it stops meaning anything, and this list is a very confusing message for the Commission to put out.”

Harmful

To form the list, the EU assessed countries on their compliance with transparency & exchange of information standards and absence of harmful tax measures. Those on the list have been flagged up by 10 or more EU member states.

Le Toq said he was “surprised” to see Guernsey on the list as it only appears on nine blacklists, with the EU including it because neighbouring Sark appears on an additional list.

“We have tried to explain to the Commission that Guernsey has no jurisdiction for tax matters in Sark, but we have yet to receive any response,” he said.

“Our association with anything uncooperative is counter-productive to our agenda of moving towards an international standard of cooperation for the Common Reporting Standard, of which we are an early adopter.”

International standards

Le Tocq said that Guernsey so far appears on nine EU member states lists largely for reasons out of its control. For example, he said that some countries have automatically included Guernsey because it has a zero tax base, some have not updated their list since signing a double tax agreement with the crown dependency, and some had simply forgotten that it was on their list.

He said that rather than “arbitrarily” highlighting countries which are un-cooperative, it would be more useful for the Commission to focus member’s attentions on international standards.
“For the last few years, the move has been away from blacklists and towards whitelisting and international standards,” he said. “This has been down to the fact that putting together varying criteria between jurisdiction actually serves no purpose toward removing the sort of bad tax practices that should not happen.

“It is possible for a small jurisdiction like Guernsey to be totally transparent and compliant and not attract the sort of negative attention received by larger jurisdictions.”

The BBC has previously reported that the EU Commission admitted there were “inconsistencies” in information used to put Guernsey on the blacklist.
Liechtenstein, Hong Kong and Bermuda have also contested their inclusion.

The Commission’s full list of non-cooperate tax jurisdictions is as follows: 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.