France Released an Updated Blacklist for Tax Havens
Each country typically has its list of tax havens that are blacklisted, potentially with a gray list as well. The consequences for blacklisted countries vary. However, they may include economic sanctions or decreased economic opportunities within the country that created the list. As part of the European Union, the tax haven blacklist used by France overlaps with the EU’s blacklist significantly, but the country still makes occasional changes to it.
Most recently, France added Seychelles to its tax haven blacklist and removed Botswana.
Reasons for the Removal of Botswana
According to the French authorities, the country decided to remove Botswana from its tax haven blacklist because the country complied with rules regarding exchanging information on various taxable entities.
Reasons for Additions
While Botswana was removed from the tax haven blacklist, Seychelles, an archipelago, has been added. According to the French Minister of Action and Public Accounts, this is due to Seychelles refusing to comply with rules that France wants to set regarding the sharing of information. France also added Anguilla, the British Virgin Islands, and the Bahamas to the list. The same reasons were cited for including these countries on the list as the inclusion of Seychelles.
France’s Minister of Public Action and Accounts, Gerald Darmanin, acknowledged that the France tax haven blacklist is stricter than that of the EU. He said that the jurisdictions recently added do not provide enough financial transparency.
The Consequences
In France, the countries that are on the tax haven blacklist have to deal with reduced ease of fund transfers. Those fund transfers must deal with tighter conditions, which Seychelles now has to face along with all of the other countries on the French tax haven blacklist.
What Blacklisted Countries Say
The newly blacklisted countries have already expressed their displeasure with their inclusion on the updated France tax haven blacklist. Peter Turnquest, the deputy prime minister of the Bahamas, indicated that the country was taken by surprise. He indicated that the Bahamas had inquired about France’s criteria for blacklisting and wants to address them.
The premier of the British Virgin Islands, Andrew Fahie, released a statement that indicated France overlooked the positive tax cooperation the two jurisdictions have had. According to Fahie, the country follows the BVI-France Tax Information Exchange Agreement. He stated that they continue to cooperate and said there must be a misunderstanding or miscommunication. The British Virgin Islands is working to resolve the issue.
Plenty of Criticism
The updates to the tax haven blacklist in France are not without their critics. Interestingly, the criticism is not only from those who support the concept of tax havens or high net worth individuals. Oxfam France tweeted about the updated blacklist. It indicated that it is inconsistent with updating this list annually, as France is doing.
According to Oxfam France, this type of annual update makes no sense since France does not correctly regulate access that companies on the French financial market have. Oxfam France also cited its 2016 report that indicated some of the companies on the CAC 40 had subsidiaries in tax havens numbering in the thousands.
The further controversy comes from the Tax Justice Network, a British non-governmental organization, which named France, in 2019, as one of the most aggressive countries in the OECD in terms of the favorable tax treatment of Africa. This was an accurate accusation. France has multiple tax agreements in agribusiness, services, and mining sectors that allow French company subsidiaries to pay reduced income tax in numerous African countries. Given the country’s tax haven issues, some critics feel that France has no leg to stand on when criticizing other countries for the same thing.
The Current List
Now the French blacklist for tax havens includes 13 jurisdictions. In addition to the newly added Seychelles, British Virgin Islands, Anguilla, and the Bahamas, it includes Guam, Fiji, American Samoa, Samoa, Vanuatu, Trinidad and Tobago, Oman, Panama, and the US Virgin Islands.
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