- Petra Roach named 2018 Ambassador of the Year at Virtuoso Week Read More
- BPSA ‘intact’ Read More
- Hetmyer sets up Warriors for thumping victory over Tallawahs Read More
- 4 more karate gold for Bajans Read More
- Wanted: A more efficient airport Read More
- Low-hanging fruit for all Read More
- TC regaled in tribute Read More
IN THE LAST TEN YEARS the international community has tried to pressure Barbados into signing tax information exchange agreements.
Successive administrations, however, have resisted by continuing to show preference for double taxation treaties.
That has not stopped the pressure, and some would argue that in some ways the global players have had their way. These observers would point to the United States Foreign Account Tax Compliance Act (FATCA), through which the American government is seeking information on their citizens who have financial accounts overseas, including in Barbados. This has been followed by a similar standard pushed by the members of the Paris-based Organisation for Economic Cooperation and Development (OECD).
Barbados has signed a FATCA-related inter-governmental agreement with the US to facilitate the “confidential” collection and automatic transfer of tax related information to the Americans. It is doing so similarly in relation to the OECD process. In both instances, Barbados will also get information on nationals with financial dealings in these countries.
Commenting on the process a few months ago, Minister of International Business Donville Inniss acknowledged that the tax exchange information agreements Barbados was signing with other countries were important. This was so especially because there appeared to be consensus in the international community that this was the way to go.
“. . . My ministry has written to the secretary general of the OECD in Paris indicating that Barbados has formally committed to signing on to the automatic exchange of tax information,” Inniss said.
“This is important because as a government there is somewhat of a paradigm shift in taking a position that Barbados needs to be a player, and to be seen as a major player in this international financial services sector where it matters most.”
He added: “We cannot sit back any longer and complain about what is being imposed upon us. As a Government, we have taken a position that it is our bounden duty to get up and go to the table and to the discussions where it matters most, so the voice of Barbados and by extension, small international financial centres can be heard.”
The Barbados Revenue Authority has a key role to play in this process. For this still relatively new state entity it will be a significant responsibility and one which will require resources, especially human resources. This is one area the experts have argued is unfair to small countries like Barbados, which in some caes have to bear a disproportionate burden when compared with major industrial countries.
Minister of Finance Chris Sinckler said recently that Government was now facilitating amendments to the Income Tax Act and implementing required information technology and administrative systems to ensure Barbados was compliant with its FATCA commitments.
He said while there would be a need for enhancements, Barbados “will adequately prepare ourselves as a tax jurisdiction for facing the many challenges which confront us”.
“More important, however, is that it will certainly enhance our reputation and our image as a clean and competent jurisdiction, full of integrity, transparency and openness as it relates to the administration of taxes.”
The question of cost is not only one Government will have to contend with, as financial institutions here, especially commercial banks, will have to allocate additional resources to facilitate the automatic exchange of information.
In an article published on financierworldwide.com, it was suggested that the implementation of mechanisms like FATCA would be “a substantial cost impact for many large financial institutions outside the United States”.
“With the introduction of the common reporting standard in the coming years, financial institutions will evolve ever more towards becoming the administrators for governments.
This will require substantial investments in terms of money and management attention and could lead to a potentially damaging diversion of money flows.”