IT IS A BATTLE that has been fought and won before. Many Barbadians would remember the fight the Owen Arthur administration took to the Organisation for Economic Cooperation and Development (OECD) more than ten years ago when it branded Barbados and more than 30 other nations tax havens.
As part of its as controversial “harmful tax practices” initiative, the OECD threatened these countries with sanctions if they did not become more transparent, including developing, signing and enforcing exchange of information agreements with some of the world’s most powerful countries which were OECD members.
In the end, there was something of a compromise where the wealthy nations, Caribbean countries and other small domiciles agreed to the establishment of a special task force to find ways to help offshore tax centres thought to be used by criminals and tax dodgers.
Commenting on the outcome of a meeting on the issue held in Barbados in 2001, Arthur said all countries had agreed on the need for the exchange of information and transparency. “All of us gained something by having to give a bit,” he noted.
Since then the OECD has not abandoned its focus on tax issues and the related exchange of information, but relations have improved and cooled over time to the extent where Barbados and other countries in the Caribbean are members of the OECD’s Global Forum.
In fact, in October last year Barbados was elected to serve as vice chair of the Forum, which Minister of International Business Donville Inniss said was the world’s largest body dealing with international tax diplomacy matters. And while the OECD and Barbados have agreed to disagree on the preference between double taxation treaties and tax information exchange agreements the distrust is no longer.
Having come so far since then, local officials including Inniss, were therefore disappointed and surprised two weeks ago when the European Commission published a list of 30 non-cooperative tax jurisdictions” including Barbados.
Head of the European Union Delegation to Barbados and the Eastern Caribbean Mikael Barfod said the list “is nothing new” and that it is “only a compilation of the lists of member states.
It is part of the Commission’s attempt to develop a common EU wide approach to corporate taxation to ensure its transparency and fairness, when currently member states have very different definitions even of what constitutes a tax haven”.
European officials said the consolidated list
“is not an assessment by the Commission but a compilation of existing lists of EU member states which looked at how non-EU countries and territories around the world apply standards of good tax governance”.
In response, Inniss said, “. . . This labelling of Barbados is extremely unfortunate and as minister responsible for international business I am not going to sit back and take this lightly.
Barbados is a reputable jurisdiction with a very clean [record] and I intend to adopt an approach where all gloves are off.”
The EU and Barbados have had their say, but what about others who are practitioners in the field and are perceived as not having an axe to grind.
Anthony van Fossen, an adjunct research fellow at Australia’s Griffith University, and who specialises in tax havens issues, said the recent European list was arbitrary and poorly constructed.
“It is a very artificial exercise in that it has been compiled simply by listing the countries that are judged non-compliant with good tax governance by ten or more EU states. And the list is very strange in that some major havens are ignored, particularly the havens in the European Union itself,” he said in an interview with Radio New Zealand.