T&T may be removed from EU’s blacklist | Local Business

TRINIDAD and Tobago may be removed from the European Union’s blacklist following the second round of the EU’s peer review, which began on June 28 and is set to conclude next month with a site visit, according to Wade George, executive chairman of Ernst and Young ( EY) Caribbean.

Speaking at the Trinidad and Tobago Chamber of Industry and Commerce’s discussion on “Private Sector Opportunities in the New Special Economic Zone” at its conference hall at Columbus Circle, Westmoorings on Thursday, George said: “We have been on that list since 2017 and based On the most recent report in February, we remained there. “We haven’t put on a framework to address the issue of common reporting standards.”

The EU blacklist was created to increase transparency, have fair tax competition and prevent measures against base erosion and profit shifting (anti-BEPS measures) to fight tax evasion and avoidance.

George added that, apart from lacking a common reporting standards framework, T&T has not achieved a rating of at least “largely compliant” by the Global Forum in relation to information exchange.

Additionally, T&T has neither signed nor ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, nor introduced the necessary legal and administrative frameworks to implement country-by-country reporting minimum standards.

The country also previously operated under the Free Zones Act, he said.

The Free Zones Act was repeated after the full proclamation of SEZ in 2022.

George explained that the Free Zones Act presented several challenges, including the existence of a ring-fenced regime aimed at protecting the core retail function of banks, minimal reporting requirements, discretionary authority elements, and full tax exemptions.

George said additionally, the act lacked a sunset clause, which would allow for termination of contracts if certain conditions weren’t met by a specified date.

There were also ineffective means to monitor the Free Zones’ contributions to the national economy and limited private sector involvement in their development and operation, he said.

“We have been on that list for a long period of time and the good news—hopefully which we will get at the end of October—is that many steps have been taken in the recent past to get us off that list. “There have been at least six pieces of legislation, and then accompanying regulations that needed to be processed to allow greater transparency.”

George added that the hope is for T&T to be moved from the blacklist to the gray list, meaning the country will still be monitored but will avoid the penalties associated with being on the blacklist.

The consequences are reputational damage, termination of double taxation agreements—a contract signed by two countries (referred to as the contracting states) to avoid or alleviate territorial double taxation of the same income by the two countries—criminal tax consequences, loss of investment, limited access to EU funding, difficulty in financial transactions and reduced economic growth.

On Tuesday, the Miscellaneous Provisions (Global Forum) Bill, 2024 was passed in the Upper House after previously being approved by the House of Representatives.

The bill was presented by Minister of Finance Colm Imbert to amend several acts including the Prevention of Corruption Act, the Proceeds of Crime Act, the Anti-Terrorism Act, the National Insurance Act, and the Financial Intelligence Unit of Trinidad and Tobago Act.

Speaking on the SEZ regime, which differs significantly from the Free Zone Act, president of the T&T Chamber of Industry and Commerce Kiran Maharaj said:

“This is intended to be a tool for our economic development and growth, a place where businesses can innovate, expand and thrive without the usual bureaucratic and financial burden. SEZ has the potential to attract much-needed foreign direct investment and there is opportunity for new partnerships and joint ventures.”

She added that the T&T Chamber is ready to collaborate with the Government and other businesses to ensure the success of the SEZ regime, while representing the needs, recommendations, and opinions of its members and the broader business community to unlock its full potential.

Explaining some of the incentives during her address, Minister of Trade and Industry Paula Gopee-Scoon said:

“In addition to the 15% corporation tax, there is a generous portfolio of concessions and exemptions on import duties and value added tax, as well as other taxes such as property tax and stamp duty. Along with fiscal incentives, the ministry is very well aware of the need to reduce the red tape involved in doing business. Together with the Customs and Excise Division, the Inland Revenue Division, the Town and Country Planning Division, and the Environmental Management Authority, among others, we hope that SEZs will be models of efficiency and productivity that can be replicated throughout our economies.”