Broken promise led to Samoa's tax blacklisting
Samoa is set to now be one of just eight nations blacklisted by the European Union as a tax haven, after failing to honour an undertaking to change its tax laws to prevent tax evasion.
Belize will this week be the latest nation to be removed from the list of nations deemed tax havens by the European Union.
But the Samoa Observer can reveal that its continued presence follows a 2017 letter in which the Government promised to change its taxation policies to comply with E.U. law that prevented large multinational companies from "profit shifting".
Laws were never changed and a source from the European Commission has told the Observer that Samoa was deemed non-compliant.
The Official Journal of the E.U. says that Samoa has a "harmful preferential tax regime" and did not commit to addressing this issue.
In a letter from the Samoa Embassy in Brussels dated 23 November 2017, Samoa promised to commit to tackling base erosion and profit shifting (B.E.P.S.) by the end of 2017. The letter was sent to the General Secretariat of the Council and Chairman of the Code of Conduct Group (C.O.C.G.), Fabrizia Lapercorella.
"Samoa is willing to commit to the implementation of anti-BEPS measures and will work towards fulfilment of the initial criterion and committing to the agreed BEPS minimum standards and implementations by the end of 2017," the letter read.
Samoa had already fulfilled the Tax transparency criteria, the letter also reads.
A month before that written undertaking, Mr. Lapercorella wrote to the Chief Executive Officers of the Ministry for Customs and Revenue (M.C.R.) and the Samoa International Finance Authority (S.I.F.A.) advising Samoa had not replied to earlier correspondence (dated June 8, 2017) and that an expert assessment had found deficiencies in Samoa’s taxation regime.
The deficiencies outlined related to criteria concerning the areas of tax transparency, fair taxation and implementation of anti-Base Erosion and Profit Shifting (anti-B.E.P.S.) measures.
"We invite Samoa to commit to amending or abolishing the above mentioned regime (Offshore Business), under the procedure specified in the letter to which this annex is attached, in order to comply with the criteria applied by the Code of Conduct Group,” his correspondence read.
"We invite Samoa to communicate the timeline for doing so.
"Please consider that possible grandfathering mechanisms can be accepted only if these do not extend beyond 2021."
In the letter from the Government, sent through the Ambassador of Samoa in Brussels, Fatumanava-o-Upolu Dr. Paolelei Luteru, he informed the E.U. Council of the amendment of the first paragraph of the Offshore Business tax regime.
"Samoa offers business vehicles for international finance activities conducted outside Samoa. These business structures include international companies, trusts, international banks, international partnerships, segregated fund international companies, international insurance companies, special purpose international companies, international mutual funds and foundations,” he said.
This amendment was made from the following draft description of an altered Samoan tax regime for exempt and offshore companies:
"Samoa offers offshore business vehicles for international finance activities conducted outside Samoa. These business structures include international companies, international trusts, international banks, international partnerships, segregated fund international companies, international insurance companies, special purpose international companies and international mutual funds."
Samoa was the sixth most used tax haven by Mossack Fonseca a now defunct notorious Panamanian company linked to major tax evasion and a 2016 scandal prompted by leaked information called the Panama Papers.
Questions put to the Chief Executive Officers of M.C.R., Avalisa Viali Fautuaalii, the Governor of Central Bank of Samoa, Maiava Atalina Ainuu-Enari and S.I.F.A., were not responded to by press time.
Other countries on the EU list of non-cooperative jurisdictions are, American Samoa, Belize, Fiji, Guam, Oman, Trinidad and Tobago, US Virgin Islands and Vanuatu.
The Central American country of Belize from the bloc’s blacklist of tax havens in a meeting this Friday, an EU document said.
The same document said eight jurisdictions are expected to remain on the list. They are: Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three U.S. territories of American Samoa, Guam, and the U.S. Virgin Islands.
The E.U. anti-money laundering blacklist was initially released in February this year and named Samoa among 23 countries that had deficient anti-money laundering controls.