By Caribbean News Now contributor
PARIS, France — France has added Bermuda and the British Virgin Islands to its list of uncooperative tax havens. French tax law applies some of its harshest rates on investors from countries deemed to be uncooperative.
France added the two territories to the blacklist, along with another British dependency, Jersey, and removed the Philippines, according to France’s official gazette dated August 21.
“Being on the ‘blacklist’ triggers the application of 75 percent withholding taxes on French source flows to those territories and the strengthening of anti-abuse mechanisms,” said Michel Collet, a partner at law firm CMS Francis Lefebvre in Paris told Reuters.
No reason was given for the move. However, given that France signed exchange-of-information agreements with Jersey, Bermuda and the British Virgin Islands in 2010, it is likely that France was simply unhappy with the response of these territories to requests for tax information, Collet said.
According to data compiled by the French government through to August 2011, Jersey and Bermuda had responded to all French requests for information. The British Virgin Islands had responded to 31 out of 41 requests, Reuters reported.
Meanwhile, BVI premier Dr Orlando Smith, in a press briefing on Friday, said that he was shocked by the decision made by the French government to add the British Virgin Islands to its list of ‘non-co-operative jurisdictions’ and is investigating the rationale behind the decision.
In an interview following the press briefing, Smith explained that the BVI has had a tax information exchange agreement (TIEA) with France since 2009 and continues to cooperate in sharing tax information.
He said the BVI has also committed to signing the EU G-5 pilot for the multilateral automatic tax information exchange, adding, “France is a party to the pilot, along with the United Kingdom, Germany, Spain and Italy.”
According to Smith, “The BVI implements the highest standards of transparency, accountability and information exchange, as set out by global organisations such as the Organisation for Economic Cooperation and Development (OECD) which has white-listed the BVI as a cooperative jurisdiction.”
He added, “We are committed to continue playing a leading role in delivering a responsible and effectively regulated global business environment and to tackling the global problem of tax evasion as part of a coordinated, balanced and meaningful process.”
The territory is contacting officials within the French government seeking clarification regarding this action and stating the BVI’s position as it seeks to resolve the issue.