fp Turks and Caicos

The Premier, The Hon. Galmo Williams MP has staked out a substantive position in respect of pronouncements from the recent G20 meetings in London; specifically as it relates to international Financial Centres. Williams indicated that his government was willing to participate in any negotiations, and to address any question of fairness in respect of financial services, and specifically, fair tax competition.

Williams argued that Turks and Caicos has historically cooperated with other governments and met international standards in light of its signing of the European Savings Tax Directive, which unfairly forced European interests into the law of Turks and Caicos, without reciprocity.

Williams intimated that given his intention to meet any request for participation head on, he felt free to deal with the larger questions emerging from the G20 on financial centres.

Williams argued that the G20 nations ought to take care that they did not appear to be selective in their designation of particular financial centres as “tax havens”. He argued that what was more important than anything was to proceed by law and to appear to intend to act lawfully and fairly despite their size.

Williams stated further that it was crucial that the situation in Turks and Caicos be considered carefully. There is an undertaking that parts of the country’s constitution will be suspended. And an apparent view that nothing its current constitutionally elected government does will be ratified. It will appear undemocratic then, for all governmental or official responses to the G20 to be delayed until the British takeover, and then a sector accounting for 20% of our GDP to be undermined by an unelected body.

Williams said that he and his government will seek to reach out to G20 members and the OECD to cease using “hot language” to describe the attitude of financial centres. He argues that European financial centres have been the ones that have spoken out defiantly and have suffered less and public are less vilified than Caribbean centres, all of which have cooperated in the past and are willing to cooperate now.

Last, Premier Williams has argued that the idea that signing 12 Tax Information Exchange Agreements (TIEAs), particularly for jurisdictions that have already signed the EU Savings Tax Directive, seems curious and, said Williams, it is easy to understand those who question just how that suddenly became an “international standard”. Williams explained that he is not saying it should not be or become such a standard, but to refer to it as such because the G20 adopted it, not for themselves but for smaller nations that had no say in the process, will eventually harm the global system of cooperation.

Turks and Caicos are situated interestingly. Dr. Gilbert NMO Morris was retained, at first to promote and them to refine the design and product mix of the Turks and Caicos financial centre. Morris is known to dislike tax arbitrage or traditional financial services of the sort offered in so many other financial centres. Morris’s view is that a financial centre must discover a real and unique product to create a “niche for itself”. In an initial conference meeting Morris said: “were it up to me, none of the financial centres in our region would have been designed in such a way as to give cause to the OECD. In fact, they ought not give cause, because OECD nations are doing the same things they pretend to oppose in financial services. But two points are to be observed: first, most of the financial centres emerged by accident and were not designed as such. Second, it is not up to me.”

During the Misick administration, The Hon. Floyd Hall, MP - former Deputy Premier and Minister of Finance – engaged Morris to take the case of Turks and Caicos to Capitol Hill in Washington DC. Morris was able to show the staffs of the sponsoring Senators of the Stop Tax Haven Abuse Act, (Obama and Levin) that Turks and Caicos was not a tax haven within the description of the act. They accepted that and agreed to change the blacklist, which was shown in that meeting to have been the same blacklist copied from the OECD 6 years previously. Morris agreed to on behalf of the Turks and Caicos government draft a Friendship Agreement between Turks and Caicos and the US, which contained the understanding arrived at in that meeting, including a Double Taxation arrangement between the US and The Turks and Caicos Islands. The draft Agreement was submitted to Governor Tauwhare before he demitted officer last year.

It is therefore interesting to see what the US attitude to Turks and Caicos will be in light of the G20 communiqué.