"Blacklist" takes toll on S.I.F.A's profitability

The European Union’s blacklisting of Samoa as one of 12 “non-cooperative jurisdictions for tax purposes” has continued to impact the profitability of the Samoa International Finance Authority (S.I.F.A.).

According to S.I.F.A's 2019 Annual Report, there was a decline of over 30 per cent in new companies registration due to strict regulations brought on by “de-risking” actions enforced by international financial organisations, such as the Organisation for Economic Development and Cooperation (O.E.C.D).

The then S.I.F.A. Chairman, Tuatagaloa Alfred Schwalger, highlighted the difficulties that the Government agency faced in the last financial year and described it as challenging for S.I.F.A. in his report.

“It was also an unfortunate year where the European Union (E.U.) listed Samoa as a non-cooperative jurisdiction under its list of countries with ‘non cooperative tax regimes’, according to E.U. rules,” he wrote in his report published as part of the 2019 Annual Report.

“It should be noted that the international standard setter on this matter for offshore financial centres is the Organisation for Economic Development and Cooperation and not the E.U. 

“Samoa is rated as ‘partially compliant’ under the O.E.C.D. rating system and is being reviewed to progress to the next level up in the near future.” 

Tuatagaloa further stated that against a backdrop of “innuendos, ambiguities and the difficulties associated with the E.U. listing”, S.I.F.A. still managed to work in close collaboration with most of the licensed trust company service providers. 

“In the conduct of its general business, figures for the year in review indicated a decline of over 30 per cent in new companies registered [new incorporations]. 

“The decline is attributed to more strict regulations about ‘de-risking’ by several international organisations like the O.E.C.D. and Financial Action Task Force (F.A.T.F.). 

“S.I.F.A. however continued to maintain its high level of ‘renewed registrations’ at over 85 per cent of companies already in its registry. 

“Efforts to upskill the management team and technical staff of S.I.F.A. were affected mostly through international standard setter forums and plenaries. 

“Despite the many changes in the world of international finance and wealth management, S.I.F.A. managed to achieve excellence in most areas of off-shore financing.”

According to the 2019 Annual Report, the total number of new international companies registered with S.I.F.A. for this financial year is 2,244. 

“Live international companies on the register as at 30th June 2019 totalled 34,972. The total gross number of international companies registered with S.I.F.A. since inception is 85,118.

“There are currently 13 licensed trustee companies or trust company service providers that link Samoa to global investors.

“The demanding pace and high standards expected by our clients challenges the registration team to constantly strive to deliver a professional service that is world class.”

S.I.F.A. Assistant Chief Executive Officer who was Acting C.E.O. when the report was compiled,  Li’o Heinrich Siemsen, stated that S.I.F.A. is confident their efforts would contribute to an improved rating for Samoa in the implementation of the O.E.C.D. Global Forum international standards on transparency and exchange of information for tax purposes. 

“Samoa was rated ‘partially compliant’ in 2015 and is now in a good position to improve to ‘largely compliant’ after its second round review in October 2019.”

Li’o added that S.I.F.A. is now a member of several international standard setting bodies. 

“It has proven its commitment throughout the year by having its management and technical staff attend meetings and workshops conducted by the O.E.C.D. Global Forum on Transparency and Exchange of Information for Tax Purposes, the International Monetary Fund, the Corporate Registers Forum, the Group of International Finance Centre Supervisors, the Group of International Insurance Centre Supervisors, and the Asia Pacific Group on Anti-Money Laundering and Counter Terrorism Financing. 

“As a member of these international bodies and the cross border nature of S.I.F.A. business necessitates cooperation amongst regulators and supervisors as access to information and ability to exchange them is key to ensure that business flowing to and from Samoa is of good quality.” 

In February this year the European Commission [EC] updated its list of non-cooperative jurisdictions for tax purposes with Samoa still among 12 nations.

“Samoa has a harmful preferential tax regime and has not committed to addressing this issue. Furthermore, Samoa committed to comply with criterion 3.1 by the end of 2018 but has not resolved this issue yet,” stated the E.C. in its updated list.

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