News - OECD critics investment visa
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Citizenship by investment: Critics from OECD The OECD has named 21 jurisdictions offering 'golden passport or visa schemes’ that it regards as potentially high-risk, in that they give wealthy individuals access to low income tax on their global assets but do not require them to spend much time in the jurisdiction. It says such citizenship- or residence-by-investment schemes can be abused to misrepresent an individual's tax residence, thus endangering tax enforcement by the automatic exchange of information. The listed jurisdictions are: Antigua and Barbuda; Bahamas; Bahrain; Barbados; Colombia; Cyprus; Dominica; Grenada; Malaysia; Malta; Mauritius; Monaco; Montserrat; Panama; Qatar; Seychelles; St Kitts and Nevis; St Lucia; Turks and Caicos Islands; United Arab Emirates; and Vanuatu. The most politically sensitive names on the list are the three EU Member States of Cyprus, Malta and Monaco. The EU Justice Commissioner, Vera Jourova, has already given notice that the European Commission considers some citizen-by-investment schemes to pose a security threat to the EU, and is considering action to regulate them. The Investment Migration Council (IMC), a lobbying organisation for the industry, defended the practice but said a strict ethical code was needed. The IMC's Chief Executive, Bruno L'ecuyer, said he had no doubt that 'there is a protectionist perspective that dominates certain countries' regarding investment migration. The OECD has also published practical guidance for financial institutions to help them identify and prevent cases of CRS avoidance through the use of such schemes. Where there are doubts regarding the tax residence of a scheme user who is trying to open an account, the OECD has recommended further questions that a financial institution may raise with the individual. Our comments: Stein Johnsen, Partner, recently commented this initiative in a conference in Hong Kong and said: "It seems like OECD is confonding citizenship and tax residency. Becoming citizen of a country other than your country of origin does not automatically tax resident in that country. Having a new citizenship and a new passport can in some circumstances be used to hide your true origin in cases of a blacklisted jurisdiction for instance. OECD should remember that we do live in an open world where people move from one jurisdiction to another and do have to accept that in doing so, they may end up with a more favourable tax position. That is what international tax competition is all about isn't it? " | ||
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