Caribbean countries that live in fear of being blacklisted by the European Union should band together and take legal action, according to Barbados-based economist and Caribbean policy expert Marla Dukharan.
“I felt like there should be some legal recourse that should be pursued collectively,” Ms. Dukharan said on Feb. 23 on the regional livestreamed show “Territories Talk,” hosted by Shaina Smith-Archer, chairwoman of the BVI Chamber of Commerce and Hotel Association.
The EU blacklist often comes under fire in the VI for being a moving target.
Ms. Dukharan said it is also unfair. EU member states such as the Netherlands and Ireland are “well known for their extensive money laundering and tax evading activities,” but have never been included on any EU blacklist, she said.
To her, this suggests Eurocentrism or even racism, and perhaps an effort to undermine countries that are “eating part of their pie,” she said of the EU.
In February, the territory was added to the EU’s “grey list,” along with nine other jurisdictions in the Caribbean and elsewhere.
Besides the VI, the EU added the Bahamas, Belize, Bermuda, Israel, Montserrat, Russia, Tunisia, the Turks and Caicos Islands, and Vietnam, bringing the total on the list up to 25 jurisdictions.
Although the February inclusion does not mean that any penalties or sanctions will be levied against the territory, the move represents a significant setback after the VI rushed through economic substance legislation at the end of 2019 in order to meet EU requirements on tax reform.
The standards for inclusion on the EU lists have frequently changed, and Ms. Dukharan pointed out that the European Parliament itself has noted problems with the selection process.
In 2021, the legislative body proposed that the tax regimes of EU member states be scrutinised along with the rest of the world and subject to blacklisting if they don’t measure up.
“That tells you that you have a legal leg to stand on, because they, the policymakers, have acknowledged that we are not applying our own standards to our own member states, and that’s not fair,” she said. “Why is it that our countries have not come together, found a law firm that will represent us collectively, and taken them to court over this action?”
She added that even a statement from the Caribbean Community condemning the actions of the EU is simply “not strong enough.”
“I think if all of the countries came together from the Pacific and the Caribbean and agitated and protested, I think that there is a chance,” she said. “For example, if you appeal to the United Nations, you appeal to the World Trade Organisation, somebody is going to hear you. But when each individual little tiny micro state appeals individually, it is just white noise.”
She also recommended that countries that object to the blacklist expel EU ambassadors.
“The second thing I think we need to do is take diplomatic action,” she said.
With changing criteria, she noted, even countries that have satisfied the Financial Action Task Force and Organisation for Economic Cooperation and Development standards still run the risk of being blacklisted.
“But we don’t have the courage to do these things because we are small and we are insecure maybe,” she said.
In a Feb. 24 press release, the EU Council said that the grey list reflects “ongoing EU cooperation with its international partners and the commitments of these countries to reform their legislation to adhere to agreed tax good governance standards.”
The countries on the grey list are working toward meeting the EU’s tax standards, the release stated.
According to the EU, criteriafor the list cover tax transparency, fair taxation and preventing tax base erosion and profit shifting. The next revision is scheduled for October.
Anguilla, Botswana, Costa Rica, Dominica, Hong Kong, Jamaica, Jordan, Malaysia, North Macedonia, Qatar, the Seychelles, Thailand, Turkey and Uruguay were previously added and remain on the grey list.
The blacklist for “non-cooperative” tax jurisdictions, which remained unchanged after the February announcement, currently includes American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, the United States VI, and Vanuatu.