Re­cent times have seen the Caribbean’s fi­nan­cial sec­tor at an epi­cen­tre of global de­bate sur­round­ing off­shore bank­ing and tax havens. This de­bate has al­ways ex­isted in the re­gion but, fol­low­ing the rev­e­la­tions in re­cent years from the mass-leak of doc­u­ments com­monly known as the Panama Pa­pers and the Par­adise Pa­pers, a new dy­namic has arisen.

One where there’s re­newed pres­sure on in­sti­tu­tions lo­cally and glob­ally to crack down on the ex­cesses and abuses that can oc­cur in the lo­cal fi­nan­cial in­dus­try. This can drive lo­cal na­tions to re­volt at re­ceiv­ing or­ders from for­eign cap­i­tals, the prac­tice hear­ken­ing back to the bad old days of colo­nial­ism. Let’s look now at the lat­est on the state of lo­cal bank­ing and global pres­sure.


Be­cause the fi­nan­cial in­dus­try is so com­plex as a stand­alone - and this made even more com­plex when it shifts from a na­tional to global per­spec­tive - many dif­fer­ent views can swirl around just what a tax haven ac­tu­ally is. That’s why it’s es­sen­tial that a clear-cut def­i­ni­tion is in­hand here, in order to recog­nise where the pres­sure points ex­ist.

Put sim­ply, a tax haven is a sov­er­eign coun­try or place (such as an over­seas ter­ri­tory of a large coun­try) where the ex­ist­ing rate of tax­a­tion for for­eign­ers is re­garded as so low as to be in­ef­fec­tive. Hence why these havens ap­peal to many of the world’s wealth­i­est who wish to avoid pay­ing a far higher rate in their home na­tion.

The tra­di­tional cul­ture of se­crecy (what some may call ‘dis­cre­tion’) that sur­rounds these havens has fur­ther in­cen­tivised clients while an­ger­ing gov­ern­ment ac­coun­tants, crim­i­nal in­ves­ti­ga­tors and so­cial ac­tivists around the world who of­ten point to tax havens as a source of global evil.

The re­al­ity of the mat­ter can see more shades of grey, es­pe­cially when it comes to a global busi­ness be­ing at­tracted to the re­gion af­ter it pre­vi­ously head­quar­tered in a place that may have had very high rates of tax. Also, many na­tions ac­tively cut or keep low cer­tain tax rates (such as the Repub­lic of Ire­land to in­cen­tivise for­eign tech com­pa­nies to head­quar­ter there).

Nonethe­less, in an era that sees the great­est global rich-poor gap since the be­gin­ning of the 1900s, few ‘reg­u­lar cit­i­zens’ have an ap­petite to hear about how bil­lion dol­lar busi­nesses and in­di­vid­u­als are hard done by.


Most reg­u­lar cit­i­zens would un­der­stand­ably find the rev­e­la­tions con­tained within the Par­adise and Panama Pa­pers odor­ous. The idea that, even if off­shore bank­ing and tax min­imi­sa­tion may be to­tally le­gal, it may be done ex­clu­sively to avoid a reg­u­lar rate of tax­a­tion in an in­di­vid­ual’s na­tive na­tion, can be un­palat­able, not only for peo­ple in the in­di­vid­ual’s home coun­try but through­out the Caribbean.

The old adage ‘I’m not rich enough to pay no tax’ is of­ten cited as a lament here. It’s a re­al­ity, too, that off­shore bank­ing at its worst can pro­vide a safe haven for the ill-got­ten gains of despots, thieves and hyp­ocrites. Of­ten­times they are one and the same.

Com­monly, pow­er­ful au­thor­i­tar­ian in­di­vid­u­als, who pa­tro­n­ise the poor­est of the poor in the world, de­cry­ing all ‘the evils of the West’, will, at the same time, make use of a fi­nan­cial av­enue that the western world pro­vides, in order to en­sure that their huge wealth (of­ten gained by thiev­ery or ex­ploita­tion of those same vul­ner­a­ble peo­ple) is se­cured un­der the rule of law in a na­tion with a sta­ble democ­racy. History shows that irony is never lost on crim­i­nals.

Nonethe­less, many peo­ple in the Caribbean are ready to work in good faith and look to com­mon-sense re­forms of is­sues in the re­gion’s var­i­ous fi­nan­cial sec­tors. It’s also true that peo­ple in the Caribbean fam­ily want to see that there is a level play­ing field glob­ally when it comes to tack­ling this is­sue, and re­cent times have seen doubt thrown on that pos­si­bil­ity.


When the Euro­pean Union an­nounced in De­cem­ber 2017 its black­list that ‘named and shamed’ tax havens, it was no sur­prise that a num­ber of Caribbean na­tions caught pub­lic­ity on the list, with Panama, Bar­ba­dos, Gre­nada and Saint Lu­cia (among other na­tions) fea­tured. But the ab­sence of one tax haven was es­pe­cially noted: the UK. Bri­tish aca­demic and ac­coun­tant Pro­fes­sor Prem Sikka went so far as to say the list ‘smacks of im­pe­ri­al­ism’. Many peo­ple of the Caribbean felt the same, won­der­ing why the re­gion’s lit­tle na­tions had been en­cir­cled when size­able pow­ers far closer to Euro­pean shores had been over­looked.

Since then, some com­mon ground has been found and in­roads made - in May the EU re­moved the Ba­hamas, Saint Lu­cia and St Kitts and Ne­vis from the black­list and shifted them to a lesser ‘grey list’.

But the EU’s process has also (iron­i­cally) faced crit­i­cism for its am­bi­gu­ity, prompt­ing Brus­sels to ul­ti­mately re­lease fur­ther doc­u­men­ta­tion sur­round­ing how the tax sta­tus of a na­tion on the black­list is as­sessed.

The ele­phant in the room here is the

Brexit ne­go­ti­a­tions. Just as it was the day

Put sim­ply, a tax haven is a sov­er­eign coun­try or place (such as a over­seas ter­ri­tory of a large coun­try) where the ex­ist­ing rate of tax­a­tion for for­eign­ers is re­garded as so low as to be in­ef­fec­tive

af­ter the vote, it’s plain and clear that the ne­go­ti­at­ing power in this mat­ter re­sides with the Euro­pean Union. Great Bri­tain now con­fronts a dif­fi­cult and un­cer­tain fu­ture, and Brus­sels knows that what­ever Lon­don achieved via Brexit, it must come with a pow­er­ful form of de­ter­rence to en­sure that other na­tions flirt­ing with the idea of an EU exit know it will leave them lick­ing their wounds.

That said, the EU also recog­nises that Bri­tain will re­main a key trad­ing part­ner in the Euro­pean bloc. It will also re­main im­por­tant as a se­cu­rity part­ner and diplo­matic ally. And ul­ti­mately, Brus­sels can­not af­ford to alien­ate Lon­don to­tally, given it is presently the sec­ond big­gest econ­omy in the EU, sit­ting be­tween Ger­many and France.


This ab­sence on the black­list of the UK is a key ex­am­ple of in­equal­ity when it comes to re­form­ing global tax havens. If such a two-tiered ap­proach to re­forms is al­lowed to grow, it in turn in­creases the risk that many peo­ple in the Caribbean, who would have oth­er­wise been ready to sup­port change in good faith, in­stead re­volt against it. They be­lieve that what­ever is­sues may ex­ist in the fi­nan­cial sec­tor, it doesn’t pro­vide li­cense for an over­seas power to is­sue edicts and de­mands from afar while over­look­ing is­sues closer to home.

Fur­ther­more, un­like the more wealthy and af­flu­ent na­tions that func­tion as tax havens, for many Caribbean na­tions the fi­nan­cial in­dus­try is a lifeblood (along­side tourism) that runs their econ­omy.

There’s no sug­ges­tion that this grants per­mis­sion to com­mit any crime; just, in­stead, that re­forms need to be pur­sued with good faith and part­ner­ship with re­gional na­tions. De­mon­i­sa­tion and dec­la­ra­tions from afar not only gen­er­ate painful re­minders of history, but could rep­re­sent a huge eco­nomic risk to the liveli­hoods of peo­ple in the Caribbean fam­ily, if reck­lessly han­dled. That’s un­likely to win sup­port lo­cally, es­pe­cially if peo­ple of the Caribbean feel there’s no global un­der­stand­ing of the re­gion’s con­cerns.

Pierre Moscovici, Euro­pean Com­mis­sioner for Eco­nomic and Fi­nan­cial Af­fairs, Tax­a­tion and Cus­toms, says he seeks a ‘cred­i­ble’ EU black­list of tax havens

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