The Samoa International Finance Authority (S.I.F.A.) says the country is being punished disproportionately for tax evasion, saying Samoa is responsible for “a mere fraction of a percent” of a  global problem.

In a statement released on Wednesday, the organisation’s Chief Executive Officer, Tuifaasisina Sieni Tualega-Voorwinden, said Samoa should be off the E.U.ropean Union’s (E.U.) blacklist of countries without firm enough tax laws by October.

This week the E.U. updated its list of non-compliant countries whose laws they deem allow tax evasion the Caribbean nation of Barbados was removed from the list. But Samoa’s status as a “non-cooperative” tax jurisdiction was maintained. Samoa has been on the list since it was established in 2017 and following this months’ review, is still there.

Tuifaasisina said of the two issues on which Samoa was found to have breached taxation regulations, the country is “fully compliant” with one, and will continue to work with the E.U. on resolving the other. 

Tuifaasisina expressed worries that the blacklist is not achieving its main goal: halting an estimated US$427 billion escaping Government scrutiny in favour of secret, often offshore accounts. 

“Is the E.U. tax blacklist working? No doubt there are widespread concerns that the E.U. blacklist is not fair and is biased against smaller countries," she said.

“Samoa is committed to good tax practices and joins a growing concern worldwide about problems with the E.U. blacklisting criteria and process.  

“The E.U. needs to ensure a “level playing field” with all countries they are in partnership with in terms of equitably set tax governance norms.”

S.I.F.A. is leading a national taskforce to get Samoa off the blacklist. The taskforce includes the Central Bank of Samoa, the Attorney General’s Office, and the Ministries of Foreign Affairs and Trade, and Customs and Revenue. 

In the E.U.’s October review, Samoa was found to have a “harmful preferential tax regime and has not resolved this issue yet.”

Samoa was also apparently committed to complying with specific requirements by the end of 2018 and had not done that by October 2020, E.U. reports say.

The requirements relate to actions nations are required to take to avoid “Base Erosion and Profit Shifting”. The measures are determined to crack down on tax avoidance by improving international tax rules and building a “more transparent” tax environment.

Tuifaasisina did not specify which of these two Samoa is now compliant with. 

“Samoa is a responsible participant in the international tax arena; hence our commitment to work collaboratively with the E.U. (and other international bodies) to ensure delisting and finding the most appropriate pathways for Samoa to enable compliance with the outstanding E.U. criteria,” she said.

“Owing to the complexity of the issues involved, this work is anticipated to take some time, however we expect to have Samoa reviewed for delisting at the E.U.’s next review in October 2021.”

International organisations, including the European Council, have recently drawn attention to problems with the E.U.’s blacklist, calling it unfair and missing the forest for the trees.

When the notorious tax haven the Cayman Islands was delisted last October, the European Council called for the entire process behind the blacklist to be reviewed, and said E.U. countries should not be overlooked as they appear to today. 

“In refusing to properly address tax avoidance, national governments are failing their citizens to the tune of over €140 billion. Especially in the current context, this is unacceptable,” the council’s Chair of the Subcommittee on Tax Matters Paul Tang said.

“That is why the [European Union] Parliament strongly condemns the recent delisting of the Cayman Islands and calls for more transparency and stricter listing criteria. 

“However, if we focus on others, we also need to look ourselves in the mirror. The picture is not pretty. E.U. countries are responsible for 36 per cent of tax havens.”

Advocacy organisations Oxfam and Tax Justice Network (T.J.N.) have said the list ignores major tax havens while going after small, albeit imperfect nations.

In 2020, T.J.N. released what they believe to be a world-first: an in-depth examination into global tax losses and financial flows of tax evasion money. 

They found that annual global tax evasion costs $427 billion. The 12 blacklisted countries (at the time) contributed less than two per cent of that. Samoa was responsible for just 0.04 per cent.

“A comprehensive analysis recently done by Tax Justice Network (TJN) in its “State of Tax Justice 2020” has revealed that all twelve countries blacklisted by the E.U. cause less than 2 percent of global tax losses,” Tuifaasisina said.

“Hence Samoa’s contribution to global tax losses is a mere fraction of a percent.   E.U. member states themselves account for 36% of global tax avoidance yet are never at any serious risk of being blacklisted.”

The other countries on the list are: American Samoa, Anguilla, Dominica (new), Fiji, Guam, Palau, Panama, Seychelles, Trinidad and Tobago, United States Virgin Islands and Vanuatu.

In 2019 it was revealed that Samoa first made it onto the tax blacklist after its Embassy in Brussels promised to improve its taxation policies but never followed through.

In a letter from the Samoa Embassy in Brussels dated 23 November 2017, Samoa promised to commit to tackling tax evasion the end of 2017. 

“Samoa is willing to commit to the implementation of [anti tax-evasion] measures and will work towards fulfilment of the initial criterion and committing to the agreed [...] minimum standards and implementations by the end of 2017," the letter read. 

That letter came after an expert assessment had found deficiencies in Samoa’s taxation regime which allegedly allowed for the creation of secret tax avoidance vehicles such as trusts, mutual funds and shell companies. 

But Samoa never did make the policy changes requested of it by the E.U. to have it removed from the blacklist. 

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.

Tuifaasisina’s full statement is reproduced below:

The results of the E.U.ropean Union’s tax blacklist review have been just released.   It is pleasing to note that the E.U. has accepted that Samoa is making good progress towards delisting from the blacklist.    Of the two criteria that Samoa was found to be deficient, we have now fully complied with one of them.  

Way forward

 Samoa is a responsible participant in the international tax arena; hence our commitment to work collaboratively with the E.U. (and other international bodies) to ensure delisting and finding the most appropriate pathways for Samoa to enable compliance with the outstanding E.U. criteria.  Owing to the complexity of the issues involved, this work is anticipated to take some time, however we expect to have Samoa reviewed for delisting at the E.U.’s next review in October 2021.  

Is the E.U. tax blacklist working?  

No doubt there are widespread concerns that the E.U. blacklist is not fair and is biased against smaller countries. All but one of the twelve blacklisted countries has a population of less than 1 million.  

A comprehensive analysis recently done by Tax Justice Network (TJN) in its “State of Tax Justice 2020” has revealed that all twelve countries blacklisted by the E.U. cause less than 2 percent of global tax losses.  Hence Samoa’s contribution to global tax losses is a mere fraction of a percent.  E.U. member states themselves account for 36% of global tax avoidance yet are never at any serious risk of being blacklisted.

Samoa is committed to good tax practices and joins a growing concern worldwide about problems with the E.U. blacklisting criteria and process.  The E.U. needs to ensure a “level playing field” with all countries they are in partnership with in terms of equitably set tax governance norms.