PARADISE/PANAMA PAPERS: European Union blacklists U.S. Virgin Island, two others

Panama Papers
Panama Papers

The European Union, EU, has added three major offshore hubs to its blacklist of uncooperative jurisdictions in the world.

The newly blacklisted hubs include the Bahamas, the U.S. Virgin Islands and St Kitts and Nevis.

All three jurisdictions were featured in either the Panama Papers or Paradise Papers global investigations conducted between 2016 and 2017.

The EU said those jurisdictions had been left off the list until now because the EU had decided to put on hold reviewing the tax systems of Caribbean jurisdictions struck by hurricanes last year.

In December 2017, the blacklist was announced in order to put pressure on mostly offshore jurisdictions that EU member states said failed to meet tax fairness and transparency benchmarks and have refused to commit to improvements in the future. In January, eight countries were removed from the blacklist, including Barbados and Panama, after they made commitments to meet the EU tax requirements.

In the new announcement made last week, Bahrain, the Marshall Islands and Saint Lucia were de-listed and moved to the gray list of countries put on notice to change their ways.

Originally excluded from the EU review of tax regimes, Anguilla, Antigua and Barbuda, the British Virgin Islands and Dominica were also added to the gray list which now includes 62 jurisdictions.

The ICIJ’s Paradise Papers and Panama Papers global investigations have spurred revelations and reforms in tax administration across the globe but analysts said public pressure is needed to effect more change.

Last week, the Council of the European Union started publishing the commitments taken by countries to move from the black to the grey list, after initially keeping them secret.

An agreement was also reached regarding intermediaries who help devise tax avoidance structures, and new rules were drafted requiring banks and accountants to report to authorities “potentially aggressive cross-border tax planning arrangements” set up for their clients.

It is believed that if European member states adopt the new set of rules, tax advisers might face fines if they fail to inform authorities of potentially harmful tax schemes set up in the EU as appropriate penalties would be implemented by the member states.

According to Vladislav Goranov, president of the council and Bulgaria’s finance minister, transparency is key to tackling tax evasion and avoidance.

He said, “Enhancing transparency is key to our strategy to combat tax avoidance and tax evasion. If the authorities receive information about aggressive tax planning schemes before they are implemented, they will be able to close down loopholes before revenue is lost.”

Revelations from the Panama Papers investigation were published almost two years ago. The global investigation revealed the offshore ties of some of the world’s most powerful people.

The global investigation came from leaked internal files containing information on more than 214,000 offshore entities tied to 12 current or former heads of state, 140 politicians and others. The revelation also brought down the prime ministers of Iceland and Pakistan.

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More than 400 journalists from 80 countries have published hundreds of stories since the first wave of revelations on April 3, 2016 and PREMIUM TIMES was the only Nigerian newspaper involved in the global investigation.

Last week, the offshore law firm whose 11.5 million leaked files led to the revelations, Mossack Fonseca, announced that it will shut downoperations.

The law firm, which had some Nigerian lawyers from the law firms of Olaniwun Ajayi Law Practitioners (OALP) and Adepetun Caxton-MartinsAgbor & Segun who acted as intermediaries, also said it will will shut down its remaining offices by the end of the month.

The Paradise Papers revelations, published in 2017, came about a year after the Panama papers. The document showed how Nigerian political and business elites used offshore entities.

Notable among them is Senate President Bukola Saraki, who was also named in the Panama Papers revelation a year earlier; Nigerian Central Bank Chief, Godwin Emefiele; Zenith Bank Chief, Jim Ovia; among others.

In November 2017, after PREMIUM TIMES began publication of details of the Paradise Papers, the Nigerian government said it would investigate users of offshore tax shelters exposed in the investigation.

The Finance Minister, Kemi Adeosun, said the Federal Ministry of Finance’s data mining project would use data provided on Nigerians from the leaks tocrosscheck tax declarations.

But nothing has been heard of the government’s proposed investigation since then.

PREMIUM TIMES recalls that in the wake of the outrage that greeted revelations from the Panama Papers investigations in 2016, the government promised to investigate those named in the revelations but nothing was heard of the proposed investigation.

Except in Nigeria where no recovery has been made, revelations from the investigations have helped governments in Europe, some part of Africa, Asia and the Americas recover more than $500 million.


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