From Haven to Blacklist: UK, EU, and Caribbean Co-operation on Tax Avoidance after Brexit

The role of Caribbean states and territories in facilitating tax avoidance is a contentious one. For almost 20 years, institutions including the OECD, the EU, and, more recently, the G20 have sought to develop measures to curtail tax avoidance. An increasingly globalised economy and the relative ease with which capital flows internationally, however, means that national or even regional solutions to the problems of tax avoidance have proved insufficient. These institutions have, therefore, sought to bring outside actors, in particular those in the Caribbean, into line with what are increasingly broadly accepted international standards on taxation. Although sometimes grudgingly, most countries and territories that are conventionally regarded as tax havens are gradually moving towards compliance with these international norms. Attempts at imposing new tax rules on tax havens, in particular by the EU, have not been without controversy, and it is arguable that without the United Kingdom as a moderating influence within the EU, coordinated action against tax havens will become stricter still, which will affect the Caribbean more than any other region in the world. This chapter considers these issues in three sections. First, this chapter examines previous and current efforts at tackling tax avoidance, in particular in the EU, with particular reference to the Caribbean. Second, this chapter outlines the shifting and, at times, diverging approaches to taxation between the UK and EU. Third, this chapter considers the relationship between Caribbean countries and territories and the EU, and the UK, and the effect that the UK’s exit from the EU will have on the latter’s approach to Caribbean tax havens. This paper concludes that while the UK’s exit from the EU will result in a diminution of the influence of Caribbean countries and territories within the EU with respect to tax policy, the prevailing global trend is towards stricter rules on tax avoidance, and that further action against tax havens, including those in the Caribbean, may be inevitable.