by Julie Wilson

THE CANADIAN GOVERNMENT is willing to reward jurisdictions with exempt surplus status if they provide tax information on Canadian companies registered in their country but the move could remove Barbados' advantage in the market.

Paul LeBreux, a tax lawyer with Canadian-based Bayshore Wealth Management Corporation, told BARBADOS BUSINESS AUTHORITY the proposed legislation would see an extension of that exempt surplus status to other offshore centres.

Exempt surplus status benefited treaty countries like Barbados because repatriated dividends/profits to Canada by Canadian companies were exempt from further taxation in that country. However, Canada is proposing to extend that status to any country willing to sign a tax information exchange agreement.

The local international business community is concerned that this will eliminate Barbados' advantage in relation to zero-tax offshore centres such as Bermuda, Cayman and The Bahamas.

LeBreux explained this on Tuesday, noting that while Barbados provided tax information to Canada and reaped the benefits from exempt surplus, officials needed to be concerned about those competing countries that did not have a tax system in place reaping the same benefits from Canadian companies.

Notwithstanding the proposed change, the legal tax expert said Barbados had a strong infrastructure and sound work ethic and was knowledgeable on dealing with the international business sector.

These attributes separated Barbados from other jurisdictions, he said, but cautioned that the country also needed to address weaknesses in access to information.