Eminent Queen’s Counsel Balraj Bhatia Agrees CBI Does Not Assist Circumvention of Taxation

The Ernst & Young report states that ‘citizenship is a concept distinct from tax residency. Citizenship should not give rise to tax avoidance and evasion opportunities, as the reporting rules are explicit in not using citizenship as a test.’ Similarly, the Smith & Williamson report concludes that ‘citizenship by investment does not present a risk to facilitating tax evasion, as citizenship alone is insufficient to secure tax residency of a country.’

In his opinion, Mr Bhatia welcomed both reports, noting their conclusions to be ‘sound’ and ‘valuable and opportune given the criticism levied against CBI states by entities that erroneously associate CBI with tax residency and tax evasion.’ Mr Bhatia was likely referring to the Organisation for Economic Co-operation and Development (OECD) and the European Union, which he cites earlier in his paper as criticising Dominica and St Kitts and Nevis” CBI programmes for presenting opportunities to evade tax liability.

Mr Bhatia himself finds that ‘the CBI Programmes of Dominica and St Kitts and Nevis do not in and of themselves confer the status of tax resident’ and that ‘generally speaking, taxation authorities look to ”tax residency” as the better way of determining whether an individual has tax liabilities in that country – not citizenship.’ With respect to the tax reporting and international efforts at sharing information, he notes that ‘it is not enough for a person to become a citizen of Dominica or St Kitts and Nevis for that to qualify him as a tax resident of Dominica or St Kitts and Nevis for purposes of the CRS.’ For this reason, like the Smith & Williamson and Ernst & Young reports, Mr Bhatia subscribes to the opinion that CBI programmes neither undermine tax regimes nor put at risk tax revenues.

Mr Bhatia”s opinion takes a clear stance on CBI, particularly as it relates to Dominica and St Kitts and Nevis – two countries where CBI has formed part of the nation”s legislative history for decades. It condemns as ‘unjustified’ the characterisation of CBI programmes as elaborate tax evasion schemes, and instead highlights the benefits that CBI brings to applicants and nations alike – giving food for thought to influencers who would have countries phase out their CBI programmes despite their overall positive impact.

The full opinion issued by Mr Bhatia is available here.

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LONDON, May 8, 2019 PRNewswire/– Eminent barrister Balraj Bhatia, a Queen”s Counsel and a member of London”s Inner Temple, has given a formal opinion on whether ‘citizenship by investment’ (CBI) in the Caribbean islands of Dominica and St Kitts and Nevis allows the circumvention of tax liabilities. The opinion refers specifically to two recent reports addressing the matter – the first issued in March by Ernst & Young and the second in April by Smith & Williamson.