The Office of the Prime Minister said Vanuatu has pledged its commitment to join the Organization for Economic Co-operation and Development (OECD) Global Forum on tax Information Exchange Agreement way back in 2009.
The Global Forum now has 133 members on equal footing and is the premier international body for ensuring the implementation of the internationally agreed standards of transparency and exchange of information in the tax area.
These international standards are imposed on all member jurisdictions of the Global Forum.
Prime Minister Charlot Salwai Tabimasmas was responding to statements by the Leader of Opposition, Ishmael Kalsakau for the government to stand up against threats from outside Vanuatu’s tax haven status. Inside the crowded market house in Port Vila last Friday Kalsakau said international organizations such as the OECD continue to issue threats against Vanuatu’s tax haven policy to place the country on the black list.
Kalsakau claimed the OECD has its politics against Vanuatu, to get the country out of our tax haven situation, so it can control the country from outside. And he challenged Prime Minister Salwai to stand up to the US government over the OECD rules.
The head of government says as a member of the Global Forum, Vanuatu is working to honour its commitments to having an effective exchange of information system in place.
“Vanuatu has ratified over 10 Taxation Exchange of Information agreements that allow for the jurisdictions to request tax information from each other. These agreements however, cannot become effective until Parliament enacts domestic law to support those agreements. In addition, Vanuatu is required to implement a legal framework to empower its domestic competent authority to be able to access information for tax from any requesting jurisdictions. Similarly, the competent authority will have powers to request information for tax purposes from other countries concerning tax related issues. Again, the legal framework will impose checks and balances to avoid any fishing expedition requests”.
Already, the Government has announced in the 100-day plan that it would introduce legislation necessary to give effect to our obligation to exchange information, when requested, as soon as possible.
On Tuesday, the Minister for Finance and Economic Management Gaeton Pikioune assured the Global Forum that Vanuatu will implement the new automatic exchange of information standards and with the Global Forum’s assistance; the government will expect to implement this initiative from 2018.
The prime minister confirms his Government recognises that citizens have a legal obligation to their country’s tax commitments. By avoiding or evading their tax obligation, they deprive their national Government of its ability to better protect and strengthen its economies and improving the social welfare of its citizens.
The Global Forum standards require that all members be responsible and transparent and have the ability to access information for tax purposes and be able to actively participate in international exchange of information for tax purposes.
Further, the government added that members of the Global Forum are all of equal standing. The United States or any other member country has authority to demand Vanuatu change its laws. Rather, the Global Forum has established a system to ensure member countries comply with the agreed standards.
Prime Minister Salwai says it is disappointing that the Opposition was misled into saying that Vanuatu was bowing to U.S pressure. On the contrary, Vanuatu has, as a member of the Global Forum sought to honour its obligations and meet its international obligations on transparency and exchange of information.
“My Government wishes to inform that Vanuatu is not supporting the exchange of tax information as a result of any threats by the U.S or any other country. Vanuatu has made long standing commitments to having transparent taxation systems in place.” Despite the challenges of the past (including Cyclone Pam) this Government is confident that with the assistance of the Global Forum, Vanuatu will successfully implement these standards”.
The Government aims to protect and nurture Vanuatu’s reputation as a good investment location that is well managed.
The prime minister says the Government’s review of revenue laws and their administration is a further initiative this Government is embarking on to ensure that inefficient taxes and charges do not hinder Vanuatu’s economic development.
“Our aim is to support the Vanuatu community by having a modern economy, supported by fair, effective and efficient revenue system that pays for the essential services the Government must provide”.