Caribbean’s CBI Residency Mandate Plans Could Trigger Global Tax Alarm

The Caribbean's plans to introduce residency requirements in their Citizenship by Investment Programmes (CBIs) could have unintended consequences on the global regulatory front, potentially drawing fire from international tax authorities.

Experts warn that adding a residency component to CBIs traditionally designed to grant citizenship without the need to physically reside could open the door to objections from the Organisation for Economic Co-operation and Development (OECD). The OECD may interpret the move as enabling individuals to claim non-residency in their home countries, avoiding tax liabilities and undermining international tax compliance frameworks.

A similar thing happened in 2018, when Dominica was placed on the OECD’s grey list during a review of jurisdictions not aligning with anti-tax avoidance standards. At the time, Dominica clarified that its programme conferred citizenship, not residency, a distinction backed by independent assessments from Ernst & Young and Smith & Williamson. These reports underscored that without residency rights, the programme could not be exploited for tax evasion purposes.

However, if Caribbean nations now opt to embed residency requirements into their CBI offerings, they may lose that crucial line of defence. The OECD could argue that such provisions make it easier for economic citizens to manipulate tax obligations, potentially escalating international scrutiny.

“The difference between citizenship and residency has always been a critical buffer for these jurisdictions,” said a regional policy analyst. “Blurring that line could erode the very foundation that has helped them maintain credibility in the face of tax transparency demands.”

Should the OECD view these changes as non-compliant, the fallout could go beyond greylisting. A move to blacklist could significantly impact financial relationships, investor confidence, and access to global banking systems.

As the global tax environment grows increasingly stringent, Caribbean nations may need to weigh the perceived benefits of introducing residency against the risks of triggering regulatory backlash. Instead of reinforcing programme integrity, the shift could inadvertently undermine it placing these small economies under sharper international scrutiny.