Citizenship and Residence Programmes in the Caribbean Raise Tax Evasion Concerns for OECD

Some of the Caribbean’s citizenship and residence programmes have raised the eyebrows of the Organisation for Economic Co-operation and Development (OECD). The Paris-based organization yesterday released a list of 21 countries, nine of them in the Caribbean, that offer “golden passports” or visas that could help people evade tax.

Antigua and Barbuda, The Bahamas, Barbados, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, and the Turks and Caicos Islands are on the list.

The OECD said while residence and citizenship by investment schemes allow individuals to obtain citizenship or residence rights through local investments or against a flat fee for perfectly legitimate reasons, they can also be potentially misused to hide assets offshore.

“[These schemes], often referred to as golden passports or visas, can create the potential for misuse as tools to hide assets held abroad from reporting under the OECD/G20 Common Reporting Standard (CRS),” it said in a statement issued along with the list which was published after analyzing residence and citizenship schemes operated by 100 countries.

“In particular, [identification] cards, residence permits and other documentation obtained through CBI/RBI schemes can potentially be abused to misrepresent an individual’s jurisdiction(s) of tax residence and to endanger the proper operation of the CRS due diligence procedures.”

In the case of Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia, it’s the Citizenship by Investment programmes that has caused the OECD to flag them. The OECD is also concerned about Antigua and Barbuda’s Permanent Residence Certificate and St Kitts and Nevis’ Residence by Investment.

While the others do not have CBI programmes, other residency provisions have landed them on the list.

The Bahamas is named for its Economic Permanent Residency; Barbados for Special Entry and Residence Permit; Montserrat for its Economic Residency Programme; and the Turks and Caicos Islands for its Permanent Residence Certificate.

The OECD said it characterized the named countries’ schemes as potentially high-risk as they give access to a low personal tax rate on income from foreign financial assets and do not require an individual to spend a significant amount of time in the jurisdiction offering the scheme.

Going forward, the organization said, it will work with CRS-committed jurisdictions, as well as financial institutions, to ensure that the guidance and other OECD measures remain effective in ensuring that foreign income is reported to the actual jurisdiction of residence.

Meantime, The Bahamas government has rejected reports that it has been blacklisted by the OECD.

A release issued by the Ministry of Finance stated: “The Ministry was assured that the characterization of the list as a blacklist is completely inaccurate. The Bahamas is under no obligation to take any measures to change its investment schemes. “