Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE for Tax Purposes OF INFORMATION FOR TAX PURPOSES PEER REVIEWS, PHASE 2: SAINT LUCIA This report contains a “Phase 2: Implementation of the Standards in Practice” review, as well as revised version of the “Phase 1: Legal and Regulatory Framework review” already released for this country. Peer Review Report The Global Forum on Transparency and Exchange of Information for Tax Purposes is the Phase 2 multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 120 jurisdictions which participate in the work of the Global Forum on an equal footing. Implementation of the Standard The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These in Practice standards are primarily refl ected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has P SAINT LUCIA e been incorporated in the UN Model Tax Convention. er R e The standards provide for international exchange on request of foreseeably relevant v ie information for the administration or enforcement of the domestic tax laws of a requesting w R party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must e p be provided, including bank information and information held by fi duciaries, regardless of the o r existence of a domestic tax interest or the application of a dual criminality standard. t P h a All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum as se relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 2 Im reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange p of information, while Phase 2 reviews look at the practical implementation of that framework. lem Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. en The ultimate goal is to help jurisdictions to effectively implement the international standards tatio of transparency and exchange of information for tax purposes. n o All review reports are published once approved by the Global Forum and they thus represent f th agreed Global Forum reports. e S ta For more information on the work of the Global Forum on Transparency and Exchange of n d Information for Tax Purposes, and for copies of the published review reports, please visit ard www.oecd.org/tax/transparency and www.eoi-tax.org. in P ra c tic e S A Consult this publication on line at http://dx.doi.org/10.1787/9789264217898-en. IN T This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and L U statistical databases. C IA Visit www.oecd-ilibrary.org for more information. ISBN 978-92-64-21785-0 9HSTCQE*cbhifa+ 23 2014 24 1 P Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Saint Lucia 2014 PHASE 2: IMPLEMENTATION OF THE STANDARD IN PRACTICE August 2014 (reflecting the legal and regulatory framework as at May 2014) ThisworkispublishedontheresponsibilityoftheSecretary-GeneraloftheOECD. Theopinionsexpressedandargumentsemployedhereindonotnecessarilyreflect theofficialviewsoftheOECDorofthegovernmentsofitsmembercountriesor thoseoftheGlobalForumonTransparencyandExchangeofInformationforTax Purposes. Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatusof orsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersand boundariesandtothenameofanyterritory,cityorarea. Pleasecitethispublicationas: OECD(2014),GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeer Reviews:SaintLucia2014:Phase2:ImplementationoftheStandardinPractice,OECDPublishing. http://dx.doi.org/10.1787/9789264217898-en ISBN978-92-64-21785-0(print) ISBN978-92-64-21789-8(PDF) Series:GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeerReviews ISSN2219-4681(print) ISSN2219-469X(online) CorrigendatoOECDpublicationsmaybefoundonlineat:www.oecd.org/publishing/corrigenda. Revisedversion,August2014. Detailsofrevisionsavailableat:http://www.oecd.org/about/publishing/Corrigendum-TaxPeerReview-Saint- Lucia-2014.pdf ©OECD2014 Youcancopy,downloadorprintOECDcontentforyourownuse,andyoucanincludeexcerptsfromOECD publications,databasesandmultimediaproductsinyourowndocuments,presentations,blogs,websitesand teachingmaterials,providedthatsuitableacknowledgmentofOECDassourceandcopyrightownerisgiven. Allrequestsforpublicorcommercialuseandtranslationrightsshouldbesubmittedtorights@oecd.org. Requestsforpermissiontophotocopyportionsofthismaterialforpublicorcommercialuseshallbeaddressed directlytotheCopyrightClearanceCenter(CCC)[email protected]çaisd’exploitationdu droitdecopie(CFC)[email protected]. TABLE OF CONTENTS – 3 Table of Contents About the Global Forum                                             5 Executive Summary                                                 7 Introduction                                                       11 Information and methodology used for the peer review of Saint Lucia        11 Recent developments                                               20 Compliance with the Standards                                       21 A. Availability of Information                                        21 Overview                                                        21 A1 Ownership and identity information                               23 A2 Accounting records                                            58 A3 Banking information                                           67 B. Access to Information                                            73 Overview                                                        73 B1 Competent Authority’s ability to obtain and provide information        75 B2 Notification requirements and rights and safeguards                  89 C. Exchanging Information                                          91 Overview                                                        91 C1 Exchange-of-information mechanisms                             92 C2 Exchange-of-information mechanisms with all relevant partners       102 C3 Confidentiality                                               103 C4 Rights and safeguards of taxpayers and third parties                 108 C5 Timeliness of responses to requests for information                  110 Summary of Determinations and Factors Underlying Recommendations   117 PEER REVIEW REPORT – PHASE 2 – SAINT LUCIA © OECD 2014 4 – TABLE OF CONTENTS Annex 1: Jurisdiction’s response to the review report                   123 Annex 2: List of all Exchange-of-Information Mechanisms in Force       124 Annex 3: List of all laws, regulations and other relevant material         126 Annex 4: Persons interviewed during the onsite visit                    128 PEER REVIEW REPORT – PHASE 2 – SAINT LUCIA © OECD 2014 ABOUT THE GLOBAL FORUM – 5 About the Global Forum The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 120 jurisdictions, which participate in the Global Forum on an equal footing The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transpar- ency and exchange of information for tax purposes These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commen- tary as updated in 2004 The standards have also been incorporated into the UN Model Tax Convention The standards provide for international exchange on request of fore- seeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed This process is undertaken in two phases Phase 1 reviews assess the quality of a jurisdic- tion’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework Some Global Forum members are undergoing combined – Phase 1 and Phase 2 – reviews The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitor- ing of jurisdictions following the conclusion of a review The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the pub- lished review reports, please refer to wwwoecdorg/tax/transparency and wwweoi-taxorg PEER REVIEW REPORT – PHASE 2 – SAINT LUCIA © OECD 2014 ExECUTIVE SUMMARy – 7 Executive Summary 1 This report summarises the legal and regulatory framework for transparency and exchange of information in Saint Lucia as well as the prac- tical implementation of that framework The assessment of effectiveness in practice has been performed in relation to a three year period (1 July 2010 through 30 June 2013) 2 The international standard which is set out in the Global Forum’s Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information is concerned with the availability of relevant information within a jurisdiction, the competent authority’s ability to gain timely access to that information, and whether that information can be effectively exchanged with its exchange of information (EOI) partners In 2005, Saint Lucia committed to implementing the international standards of transparency and information exchange, and since then has taken significant steps towards developing its legal framework and network of information exchange agreements in line with that commitment Notwithstanding the pro- gress already made, the report identifies some areas, particularly with respect to obligations to maintain reliable accounting information and accessing information in practice, where improvements are needed to more effectively implement the international standard 3 Relevant entities and arrangements are generally subject to require- ments to keep relevant ownership and identity information, with the exception of companies formed in the Caribbean Community (CARICOM) or members of the Organisation of East Caribbean States (OECS) which are carrying on business in Saint Lucia For entities linked to the international financial services sector namely International Business Companies (IBC), International Partnerships and International Trusts, there are not binding obligations to maintain all relevant accounting records, for a minimum 5 year period Recommendations are made for Saint Lucia to address these short- comings, and the essential element of the international standard concerning accounting information is found to be not in place Bank information is required to be kept as a result of the obligations found in Saint Lucia’s anti- money laundering (AML) regime PEER REVIEW REPORT – PHASE 2 – SAINT LUCIA © OECD 2014 8 – ExECUTIVE SUMMARy 4 In practice, the obligations in place to ensure the availability of own- ership and identity information, as well as banking information for account holders, are accompanied by appropriate penalties for non-compliance However, it is noted that the lack of a comprehensive system of monitoring by the Registrars and the regulators may not ensure that complete ownership information is being maintained in respect of all legal entities in Saint Lucia 5 Over the review period, accounting information was unable to be provided in those cases where it was requested It is recommended that on the implementation of accounting record requirements to the standard, Saint Lucian authorities should monitor the practical implementation of these requirements to ensure the availability of accounting information for all entities 6 Saint Lucia’s access powers are set out under its Income Tax Act, which at the time of the Phase 1 review were identified as being subject to a possible domestic tax interest Saint Lucia enacted the International Tax Cooperation Act (ITC Act) in August 2012 which clarifies the Minister’s powers to access all types of information for EOI purposes Saint Lucia also amended the Income Tax Act in January 2014 to clarify that its access powers can be used to gather information for the exchange of information under one of its international agreements Saint Lucia has advised that its powers under the ITC Act take precedence for all EOI related processes 7 Under the ITC Act, the Minister or his duly appointed representative have broad powers to obtain relevant information from any person within the jurisdiction who has relevant information in his possession, custody or under his control The Act also grants the power to search premises and seize infor- mation, via judicial procedure, where there is a reasonable doubt that relevant information is endangered The Minister’s access powers are predominantly exercised by the issue of a notice to a third party requesting the production of information Although penalties are set out under the Income Tax Act for not providing the information, it is noted that there is currently no penalty for not providing the requested information to the Minister under the ITC Act A recommendation has been made for Saint Lucia to address this omission Therefore, access to information by the competent authority for EOI purposes is found to be in place 8 In practice, the competent authority was unable to access IBC own- ership information from registered agents in two cases and was unable to access IBC accounting information for all cases over the review period in which it was requested It is noted that the access powers in force under the Income Tax Act at that time were subject to a potential domestic tax interest and in practice were not sufficient for the competent authority to successfully access information in all cases Further, in regards to accessing IBC account- ing information, it was the practice of the competent authority at the time to PEER REVIEW REPORT – PHASE 2 – SAINT LUCIA © OECD 2014