Fiji on EU blacklist
15 March, 2019, 10:00 am
FIJI is one of 15 countries black listed by the European Commission for being a non-cooperative tax jurisdiction.
The implications for Fiji could be significant.
European Union member states have agreed on sanctions to apply at national level against the 15 listed jurisdictions.
How this will affect the country remains to be seen as the announcement was only made this week.
Fiji has been blacklisted by the European Commission for being a non-cooperative tax jurisdiction.
As a result, Fiji could face sanctions from the European Union and the EC’s decision could impact on EU funding into the country.
In response to queries from this newspaper, an EC spokesperson referred The Fiji Times to a press statement issued by the commission on March 12.
The EC said over the course of last year, it had assessed 92 countries based on three criteria — tax transparency, good governance and real economic activity, as well as one indicator, the existence of a zero corporate tax rate.
Based on the EC’s screening, 15 countries, including Fiji, were blacklisted.
EC Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said the EU tax havens list has had a resounding effect on tax transparency and fairness worldwide.
“The countries that did not comply have been blacklisted, and will have to face the consequences that this brings,” he said.
At EU level, the commission has put in place and proposed new measures to ensure that the EU list has real impact.
The list is now linked to EU funding under new provisions in the financial regulation and in the European Fund for Sustainable Development (EFSD), the European Fund for Strategic Investment (EFSI) and the External Lending Mandate (ELM).
Funds from these instruments cannot be channelled through entities in listed countries. There is also a direct link to the EU list in other relevant legislative proposals.
However, Fiji Revenue and Customs Service CEO Visvanath Das yesterday said recent labelling of Fiji as a noncooperative jurisdiction would prove largely symbolic, having virtually no impact on the extremely minimal EU trade and investment in the country.
Mr Das said the EU’s decision was based on the incentive package Fiji uses to attract and cultivate new business –– such as moving headquarters to Fiji –– thereby spurring domestic economic activity and job creation. “Fiji stands by its business incentive package –– one that has contributed to the nation’s unprecedented nine-year streak of economic growth.
The EU did not carry out an impact analysis on the impact that the removal of these tax incentives would have on the Fijian economy, despite requests from FRCS,” he said.
He said without an impact assessment, the haphazard removal of standing tax policies would have been hugely irresponsible and the FRCS voiced these concerns to the EU, noting the economically-destructive impact that removing tax incentives would have, including the loss of thousands of Fijian jobs, but to no avail.
“To be clear, the nation’s tax policies –– which are in line with international standards –– do not create any tax avoidance opportunities that would allow EU businesses to artificially shift their profits to Fiji to minimise tax. On the contrary, Fiji has demonstrated that these incentives create real economic activity and has direct impact on the nation’s macro-economic stability. The EU’s decision was both ill-informed and out-of-touch with the needs of a developing economy.”