The Caribbean, the OECD and the empty black list

After all the hype about tax havens and offshore banking secrecy, the black list is no more. Gone forever or just the calm before the Caribbean storm?

The infamous black list of un-cooperative tax havens, maintained by the Organisation for Economic Co-operation and Development (OECD) and dominated by Caribbean jurisdictions is empty now. In an increasingly borderless world there seems to be no rogue tax regime any more. But this is just a temporary silence and definitely not forever.

Therefore, it is interesting to know which Caribbean countries will find themselves on this list shortly and which affect it has if you live and invest in a blacklisted country. Practical aspects of the past, the present and the future are discussed in the following.

Founded in the post-second world war area, it took the OECD more than 50 years before it listed 15 jurisdictions as tax havens according to criteria it had established by itself. This first list, dated from the year 2000, covered countries from Bermudas over to the Cayman Islands, and on to Saint Vincent and the Grenadines. OECD said it had investigated 31 countries, before drawing up the list.

In 2000 a OECD report named and shamed 47 “preferential tax regimes“ and 35 tax havens. These listed countries have been threatened by the OECD with “defensive measures" if they fail to “eliminate harmful features of their regimes." In the following years most of the listed company did make commitments to transparency and exchange of information. Among these are Barbados and the US Virgin Islands.

Seven jurisdictions (Andorra, Liechtenstein, Liberia, Monaco, Marshall Islands, Nauru and Vanuatu) resisted all requests and threads - this does not include any Caribbean jurisdiction. In April 2002, these Seven Samurai were formally identified by the OECD as uncooperative and, as a result, the list of seven went black.

This was called the high-water mark of the anti-offshore initiative. However, things were going to get worse before they got better, if they even get better at all.

All of these jurisdictions subsequently have been involved in negotiations to make some or full commitments. Costa Rica has been one of the last jurisdictions that escaped the list. Based on these statements the OECD decided in May 2009 to remove all seven from the black list.

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