US Treasury objects to EU blacklisting of Am Samoa & Guam

The blacklisting of American Samoa and Guam by the European Union as non cooperative tax jurisdictions has attracted a response from US Treasury Secretary Mnuchin.

The two US territories were among five Pacific islands in the EU list released early this month.

A statement from the EU said the purpose of the listing was to clamp down on tax evasion and avoidance…and would help the EU to deal with external threats to member states tax bases and to tackle third countries that consistently refuse to play fair on tax matters.

According to a press release from the Governor’s Office this morning, “the EU blacklisting came as a complete surprise to authorities in American Samoa as the EU had made no contact with the governor, the Treasurer, the Tax Office, the Legislature no anyone else in American Samoa so far as could be determined.”

KHJ News shared the EU release with the Tax Office Manager and Director of Commerce and sought comments when it came out December 5th.

The release from the Governor’s Office this morning says that upon learning of the blacklisting of American Samoa, Governor Lolo Moliga immediately asked the AG and the Treasurer to engage with relevant authorities in the US Department of Treasury to determine the next appropriate steps.

A lengthy conference call was held December 8 between the AG, Treasurer and representative of the US Treasury Office of International Tax Counsel.

It was learned from the conference call that EU due diligence involved communication with US Treasury only and it was confirmed that no dialogue was had with territorial representatives.

The ASG officials voiced their displeasure with the lack of engagement and the eventual outcomes and the EU’s apparent oversight of the relationship between the US and the territory.

A response on behalf of American Samoa and Guam came in a December 27th letter from Treasury Secretary Steven Mnuchin to Mr Jeppe Tranholm Mikkelson, Secretary General of the Council of the European Union.

Mr Mnuchin said the United States disagrees with the Council’s decision to subject non EU jurisdiction to a separate review process and to release its own list of non cooperative jurisdictions for tax purposes.

He called the council’s review duplicative of the process undertaken by the G-20 and Organization for Economic Cooperation and Development, OCED.

The Treasury Secretary objected in particular to the inclusion fo American Samoa and Guam on the list.

He said as territories of the United States, the two participate in the international community through the United States.

The commitments and actions of the United States in implementing Base Erosion and Profit Shifting or BEPS minimum standards extend to the US territories.

In addition, the US territories are evaluated as part of the review of the United States in the Global Forum per review process and under the criteria for non co-operative tax jurisdictions established by the G-20.

Therefore American Samoa and Guam and other US territories are already subject to monitoring of the implementation of international tax standards.

Mr. Mnuchin goes on to say that there is no basis for concluding that American Samoa and Guam have any role in promoting the evasion or avoidance of taxes imposed by European Union member states.

Governor Lolo Moliga expressed appreciation to the Attorney General Talauega Eleasalo Ale and Treasurer Ueligitone Tonumaipea and their staff for working with the US Treasury on the response to the EU.

He said this clear and unequivocal statement from Secretary Mnuchin sets the record straight with regards to American Samoa and we appreciate the secretary for doing so.

Commenting on why the EU blacklisting had not been publicly addressed sooner, AG Talauega said this was at the governor’s request.

“He told us to keep our peace until we learn what the US treasury is going to do about it. US Treasury also cautioned us to go slow as they did not want any efforts we made to get into the way of their strategic response.”