EDITORIAL – Challenge to offshore sector
The news Barbados is likely to lose one of the largest of the international business companies, which pays about $20 million in tax revenues into the treasury is unwelcome. But it highlights the need for our constant attention to the fast-moving environment in which international business operates.
Such business is very cost-conscious.
Barbados has attracted many of these Canadian and other companies because it offers a fiscal and taxation climate that results in lower tax costs to the companies registered here. For many years now, we have had a decided advantage for Canadian parent companies that based their offshore subsidiaries here.
That advantage has now disappeared because those advantages embedded in our double taxation treaty are now also contained in what are known as Tax Information Exchange Agreements which Canada has concluded with other regional jurisdictions.
A combination of circumstances outside our control has removed our unique competitive advantage and has equalized the playing field.
This development should bring our attention to certain realities.
The offshore business is a service business. Companies are established here because there is some advantage to be gained. We must therefore make our jurisdiction as fiscally attractive as possible for international business.
But there is more to do. All our ducks must be in a row. We have to match and surpass the levels of service given in the ancillary aspects of the offshore business. Parent corporations, large enough to be paying millions in taxes, will wish to have their own personnel stationed here to “mind the shop”.
Our immigration procedures, for an example, must therefore be so streamlined that irritants with such services do not become the straw that breaks the camel’s back.
The other related administrative agencies must also be operating at comparable efficiency so that companies once here will stay.
In all of this the human factor will be important.
If, for example, quicker service is available elsewhere, all things being equal, elsewhere may attract our companies. We must therefore be on our toes always.
The challenges posed by the OECD to our financial sector by fast-moving regulatory “goalposts” presents us with a serious challenge because specific expertise is required if we are to maintain market integrity against a background of threats of black white or grey listing for noncompliance. So, continuously updating our market knowledge is necessary too.
The stakes are high. We have to keep on top of the changing marketplace; and we must match that vigilance with timely and informed responses so we continue to reap the economic and social benefits for our people.