France has added Bermuda and the British Virgin Islands to its list of the non cooperative states or territories (NCST) to clamp down on corruption and tax evasion.
The move has set to impose heavy penalties on thousands of French individuals and businesses. The French government has updated blacklist of non-cooperative jurisdictions that includes the tree countries, triggering withholding taxes of up to 75% on payments from France.
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France has removed the Philippines from its list of countries deemed to be uncooperative in investigating foreign aid fraud.
French tax law applies some of its harshest rates on investors from countries deemed to be uncooperative.
The three new territories joined seven smaller financial centres that were already on the list, namely Botswana, Brunei, Guatemala, Marshall Islands, Montserrat, Nauru, and Niue. The 10 countries are banned from using French banks to share out development funds.
This decision was greeted by the offshore centres which have already bowed to international pressure to become more transparent and exchange tax information with other governments. This is rooted in the scandal involving France’s former budget minister Jerome Cahuzac.
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By GlobalDataFrance has signed exchange-of-information agreements with the blacklist of countries in 2010.
According to data collected by the French government through to August 2011, Jersey and Bermuda had responded to all French requests for information and the British Virgin Islands had responded to 31 out of 41 requests.
The finance ministry in Paris said the three territories had been blacklisted for not complying with a new criterion enforced by the government, of unsatisfactory compliance with an existing convention with France. An official said that that the terms of the blacklist would not enter into force for the three territories until January 1 2014, enabling them time to be eliminated from the list if they fulfilled their obligations by the end of the year.
Bermuda’s finance ministry has contacted French offiials to seek clarification and said it expected to complete its internal processes for automatic exchange of information by the end of September 2013.
