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Wednesday
Jun032009

Crackdown on Caribbean tax pirates

Caribbean tax havens fear their economies may be undermined by the G20 crackdown on businesses and individuals keeping their taxable income offshore.

US President Barack Obama took the G20 message direct to the Caribbean nations at the Summit of the Americas in Trinidad and Tobago, telling them he wanted no hiding place for tax cheats and sanctions might be taken against nations who sheltered them. However, there are still places that have slipped away from  scrutiny and the Black List of the G20, such as the channel islands.

Many small Caribbean nations like Antigua, Grenada, St Lucia and St Kitts have concentrated on building a tax friendly environment only to face confrontation by governments seeking to stop businesses and the rich escaping taxes.

Many nations feel their property and tourist sectors could be badly hit by the moves as the rich who hold offshore accounts and do business in the Caribbean regularly visit to meet accountants and lawyers.

While they are in the countries for business meetings, they also spend big bucks on yachts moored in expensive marinas, golf and entertaining. Many also maintain Caribbean real estate.

"The offshore sector feeds the tourism sector, and the tourism sector feeds the offshore sector," said John Beale, the Barbados ambassador to the US.

A number of Caribbean nations are in the list of some 40 secretive tax havens leaders of the G20 want to ‘name and shame’ in a bid to halt tax evasion.

White House economic adviser Larry Summers said the G20 appreciated that some nations might need more time to adapt their economies, but they should at least indicate willingness to stop trading on their tax haven status.

"Some of the countries that have benefited from their status as havens noted how important those benefits had been to their economies," Summers said.

"The president indicated understanding of their situation and willingness to work constructively on transitions."

"He also made it clear that he felt that addressing these kinds of concerns around secrecy and tax evasion and the like was really crucial to the kind of global economic and financial system that he wanted to create."

The Caribbean tax havens have begrudgingly agreed to go along with the G20 policy after President Obama’s visit and veiled threat of economic sanctions. None of them are now on the G20 tax haven black list. 

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