The news that our offshore sector was recently severely criticized in the Canadian parliament is one more inconvenient truth that the Barbados economic policymakers will have to face.
In a report earlier this month, the Standing Committee on Finance of that country’s parliament made recommendations to its government on a number of proposals to come down hard on Canadian companies and individuals using this country and other low-tax jurisdictions.
This is a matter of some importance to this country since we source a number of our major offshore investors from Canada, and given the international downturn, we need to maintain as much of that foreign exchange earning business as we can hold onto, while we seek to stabilize the economy and return it to growth.
When we consider that the Canadians themselves estimate some CAN$53.3 billion (BDS$105.3 billion) is invested in Barbados through Canadian offshore entities, then the impact of the report, which is very critical of the double taxation treaty between Canada and this country, is not to be ignored, for local jobs, vital foreign exchange and business tourism are all at stake in this important segment of our total international financial sector.
This latest piece of bad news comes in the wash of international efforts of the major countries of this world to fight tax evasion and tax havens, and in fact the Standing Committee investigation was focused on tax evasion and the use of tax havens.
We note the Minister of International Business has been reported to have declared that there will be “no retreat and no surrender” and while this is a matter which may not be susceptible to unilateral action, we fully support the minister’s further declarations that correspondence has been sent off to the Canadian authorities and that discussions will intensify over coming weeks.
Of critical importance is the Government’s commitment to building the financial sector around a “suite of treaties”, as the minister called them. We support this approach, and would draw attention to the false notion that our country is a tax haven, which we are not.
Yet, the discussion in some of the evidence to the committee seems to have classified us with the Cayman Islands, with one professor who gave evidence arguing that investment in “the Cayman Islands and Barbados is not investment in real jobs for real people, just strategies to avoid and evade Canadian laws”. This is assuredly and emphatically incorrect and we urge the minister and his advisers to disabuse his Canadian counterparts of the view that this island encourages or promotes tax evasion or welcomes brass plate companies.
In this regard, we urge the involvement of the total industry, on a large scale. This is a matter not only for the minister and his civil servants but also for all those professionals whose business it is to interact with the Canadian people.
It is clear that we benefit from our treaty with Canada, but the authorities in that jurisdiction would hardly have agreed to the treaty unless there were benefits accruing to the Canadian economy.
We may not be entirely in agreement with the sentiments implied in the assertive language of “no surrender, no retreat”, but we fully support the Government and the minister in their ongoing efforts to promote this country as a clean, legitimate, offshore jurisdiction which has always been compliant with international rules.
