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Seychelles calls for review of listing criteria of European Council as nation is placed back on tax haven blacklist

Victoria, Seychelles | October 19, 2023, Thursday @ 15:17 in Business | By: Sedrick Nicette Edited By: Betymie Bonnelame | Views: 6516
Seychelles calls for review of listing criteria of European Council as nation is placed back on tax haven blacklist

The Council added Antigua and Barbuda, Belize and Seychelles to the EU blacklist on Tuesday. (Got Credit/Flickr) Photo License: CC BY 2.0 

Seychelles has called for a review of the European Council listing criteria for its list of non-cooperative jurisdictions for tax purposes after the island nation was added to the EU's blacklist, as this can have a negative impact on foreign direct investment.   

The Council added Antigua and Barbuda, Belize and Seychelles to the EU blacklist on Tuesday.

The secretary of state for finance, Patrick Payet, told reporters on Thursday that this can have an impact on foreign direct investment, mostly those coming from the EU or other companies.

"It can also impact the banking system, where banks dealing in foreign exchange transactions, will be under more scrutiny in relation to correspondence banking, which can cause numerous delays in banking transactions, with Seychelles' reputation being affected by this," added Payet.

The Minister for Finance, Trade, Investment, and Economic Planning, Naadir Hassan, has expressed Seychelles' discontent and said that the addition of the island nation "on the EU blacklist on the basis of rigid application of criterion set purely for non-member states goes contrary to the purported principles of the list being promotion of good tax governance standards."   

Hassan said "Seychelles is calling on the EU to immediately act to review the listing criteria to effectively provide a fairer governance structure and level the playing field for all jurisdictions. Non-member states cannot be held to higher standards than member states."

Seychelles being placed back on the EU blacklist comes two months after the Global Forum on Transparency and Exchange of Information for Tax Purposes maintained the island nation's rating as "partially compliant."

The European Union (EU) screens countries on several criteria, one of which is the report from the Global Forum, to establish if a jurisdiction is considered cooperative for tax purposes or not. In 2021, Seychelles, an archipelago in the western Indian Ocean, was moved from Annex 1 - the blacklist - to Annex 2 - the watch list - on the EU list of non-cooperative jurisdictions for tax purposes.

Payet said that the main reason for Seychelles' being blacklisted is because of difficulties encountered in responding to the exchange of information requests.

This relates to one single registered agent that left the jurisdiction together with all its records in 2018, following the public disclosures in 2016 of documents linked to the activities of several service providers focusing on offshore operations ("the Panama Papers").

The company, Panama-based law firm Mossack Fonseca, received worldwide media attention in 2016 when the International Consortium of Investigative Journalists published information about the financial dealings of the firm's clients in the Panama Papers articles.

In  2018, the firm announced that it was closing due to the damage inflicted on its finances and reputation by the discovery of the multi-billion-dollar money laundering schemes.

"When this firm left Seychelles in 2018, we had not yet had laws that required an agency ceasing the operations in Seychelles, to submit all their records to the FSA (Financial Services Authority), and so when they left, they took all information about their clients with them," Payet explained.

He said that Seychelles, therefore, has been unable to provide any documents with regards to the firm's clients to any countries asking for it. This translated into Seychelles being unable to provide legal and beneficial ownership information to 26 percent and 35 percent of the exchange of information (EOI) requests received through the period under review - April 2019 to March 2022.

Payet added that should Seychelles not receive any request with regards to any of the firm's clients in the coming years, then the country would not likely have such a low percentage in terms of EOI.

He said it was expected that the EU would have taken the situation into consideration before adding Seychelles to the blacklist.

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Tags: European Council

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