Bruce Zagaris (FP)
THE THAWING OF RELATIONS between the United States (US) and Cuba will open up the opportunity for Barbados to “serve as an intermediary for investment into Cuba”.
But two prominent American lawyers, including one who advises Government, have warned that the “on paper” advantage Barbados has under its double taxation agreement and bilateral investment treaty will not be enough unless it can “assert competent authority provisions for Canadians and others using the tax treaty when Cuba does not comply with the treat provisions”.
It was also pointed out that Barbados faced competition in this area, since “already Jamaica is making a push to do this work”, and was believed to have an advantage partly because of its location closer to Cuba and the US.
Bruce Zagaris, a Barbados tax adviser, and partner in the Washington firm Berliner Corcoran & Rowe LLP, and Babak Hoghooghi, partner from the same firm, made the assertions in a new analysis entitled Developments In US-Cuba Relations: Are There Opportunities For Barbados?
“As normalisation of relations between Cuba and the United States continues, Barbados has some potential opportunities. Some of these opportunities, as mentioned above, arise from the potential for Barbados to serve as an intermediary for investment into Cuba. In this regard, the [double taxation agreement] and [bilateral investment treaty] with Cuba offer advantages, especially if Cuba will respect the provisions of these treaties. Barbados can take advantage of the fact that it is one of a few countries that has a double tax and bilateral investment treaty with Cuba, under which foreign investors can invest on an advantageous basis,” they concluded.
“However, unless Barbados can successfully assert competent authority provisions for Canadians and others using the tax treaty when Cuba does not comply with the treaty provisions, the advantage will be one on paper only.”
Zagaris and Hoghooghi therefore saw a need for Government and the private sector to “work with civil society advocates to educate the Cuban government about the benefits of adhering to the provisions of its treaty network, especially with a longtime friend such as Barbados”.
“Given Cuba’s size and its success in education, health care, and culture, Barbados can strengthen its offerings in all these spheres by embarking on exchanges and joint ventures. Barbados can do this in the context of the Cuba-CARICOM Trade and Economic Cooperation Agreement and the Cuba-CARICOM summit, and by proposing initiatives bilaterally. Because of the control exercised by the Cuban government of its economy, the Barbados Government is a critical actor,” they said.
“Moreover, the Barbados Government and private sector, including its academic institutions, professional organisations and non-profits, in collaboration with other CARICOM organisations, will want to develop connections with the parts of the US community which will look to expand their presence in Cuba, as well as with the Cuban government and private sector, so it can help develop meaningful relationships.” (SC)