The proposed legislation, introduced by several Democratic and Republican Senators, including Barack Obama of Illinois, Carl Levin of Michigan and Norm Coleman, a Republican of Minnesota, would, if enacted into law, give United States tax and securities enforcement agencies the authority to impose tougher requirements on American firms and individuals using certain offshore jurisdictions.
And Michael King, Barbados' Ambassador in Washington, said that the island was concerned about the potential impact of the bill.
"The Government of Barbados is well seized on this matter and efforts are being made in Bridgetown to ensure that the voices of Barbados will be heard in defending our position on the Barbados financial services regime," he told the
Taxation agreement
"Barbados and the US have had a double-taxation agreement since the 1980s. Indeed, a protocol was signed revising that treaty on December 20, 2004, and we do hope that there would be no legislation being proposed by members of the US Senate or Congress over-riding the language of an existing treaty between two existing states."
The proposed legislation has already drawn the fire of several influential national organisations and lawmakers on Capitol Hill who brand it as a violation of "America's obligations to the World Trade Organisation" and warned that it would "undermine American competitiveness".
The measure would, among other things:
* stiffen penalties on tax shelters by increasing the maximum fine to 150 per cent of any "ill-gotten gains" of any American taxpayers;
* force United States banks and other financial institutions to report the opening of accounts in "offshore secrecy jurisdictions" to the United States Internal Revenue Service;
* empower the United States Treasury to move against foreign offshore secrecy jurisdictions that "impede US tax enforcement";
* force hedge funds and "company formation agents" to know their offshore accounts. It would require them to establish anti-money laundering programmes like other United States financial institutions;
* prohibit the United States Patent and Trademark office from issuing patents for "inventions designed to minimise, avoid, defer or otherwise affect liability for federal, state, local or foreign tax"; and
* close loopholes in offshore trusts by taxing offshore trust income used to buy real estate, artwork and jewellery for Americans.
"We cannot tolerate tax cheats offloading their unpaid taxes onto the backs of honest taxpayers," said Senator Levin in a joint statement with Senators Obama and Coleman. "Offshore tax havens have declared economic war on honest taxpayers by helping tax cheats hide income and assets that should be taxed in the same way as other Americans."
Barbados has resisted efforts to label it as a tax haven. Instead, it uses the term "low-tax" jurisdiction to describe itself.
King said the island was very concerned about the measure because of its possible negative impact on the offshore sector not only in Barbados, but throughout the Caribbean.
"We remain focused on the matter in order to see how the leaders of the Senate would come up with a final version of the bill," King said. "We have to look at this in its totality since there is concern in the US about the impact such legislation would have on their own companies which are functioning in the international arena."
The backers of the bill are claiming that could force corporations and individuals to pay more than US$100 billion in additional taxes, which would otherwise be left offshore.
"With a US$345 billion annual tax gap and a US$245 billion annual deficit, we cannot tolerate a $100 billion drain on our Treasury," said Senator Levin.