Senior politicians associated with the Channel Islands jurisdictions of Jersey and Guernsey today denied that they were on a European Council so-called “grey list” of 47 countries, while paradoxically Isle of Man chief minister Howard Quayle accepted that his jurisdiction was.
The “grey list” is made up of countries that have been put on notice that there is work to be done to avoid being named on the blacklist of jurisdictions that help companies by way of aggressive tax avoidance.
The 47 countries include all three Crown Dependencies, as well as such British Overseas Territories as Bermuda and the Cayman Islands. (The full list of countries on the blacklist and so-called grey list can be read here.)
Jersey, Guernsey and Isle of Man are specifically listed as being associated with the “existence of tax regimes that facilitate offshore structures which attract profits without real economic activity”.
The EC has tasked the three, along with the Cayman Islands and Vanuatu, with putting their houses in order by delivering on their commitment to reform “in the area of economic substance”.
Put simply, the EU says that when a company is clearly domiciled offshore as a means of avoiding tax elsewhere in the EU, where the company’s real economic activity takes place, the EU will view this as what some disparagingly call “making use of a tax haven”, and jurisdictions seen to be providing this service will run the risk of appearing on the next blacklist.
It is a threat that Isle of Man chief minister Howard Quayle, pictured above, seemed to take seriously when being questioned on Manx Radio this morning.
Quayle seemed keen to highlight the fact that in spite of all the negative publicity that the Isle of Man had received in the recent Paradise Papers revelations — Formula One star Lewis Hamilton’s arcane, even byzantine private-jet-leasing arrangements notwithstanding — the island had escaped censure when its name failed to appear yesterday on the European Council’s 17-country blacklist.
He did, however, accept that the island had been listed on the EC’s so-called “grey list”, saying that the remaining concerns expressed by the EC’s Code of Conduct group centred around what was termed issues of economic “substance”.
Jersey and Guernsey in denial?
In contrast, Jersey’s chief minister Senator Ian Gorst last night tweeted: “Reports that Jersey is on a ‘Grey List’ are simply incorrect. #ECOFIN Conclusions acknowledge Jersey is a cooperative jurisdiction, has built a positive relationship with the EU, and is determined to meet its commitments by the end of 2018.”
And Guernsey’s former chief minister Jonathon Le Tocq seemed to take precisely the same stance as Gorst, tweeting of the “grey list”: “No such thing. There is an EU blacklist of non-cooperative jurisdictions; a list of those where a decision on status is delayed until 2018 Q1; & a list of the cooperative ones. Many of the latter have made commitments to address certain issues in a time frame. That’s normal.”