Posted on

Collection of taxes putting pressure on govts


BEA DOTTIN, [email protected]

Collection of taxes putting pressure on govts

Social Share
Share

When it comes to paying taxes, noncompliant practices among financial centres in international jurisdictions have forced regional governments to make numerous changes and constant adjustments over the years.
Maria Robinson, tax partner at Ernst & Young, made the points during the final day of the two-day LexisNexis International Tax and Trust Congress 2013 at Hilton Barbados last Wednesday.
Robinson said there was a lot of “political strong-arming going on” in some instances while some countries were “naming and shaming others”. She argued that some of those changes have resulted in less revenue for the region.
Identifying the latest instance where Starbucks, Google and Amazon where among some international companies to be accused of “immoral tax evasion”, Robinson said, “We got caught in this international crossfire. We now have to use the same rules that [the Group of 20 Developed Countries, or] G20 are using.
“OECD has unilaterally imposed them on the world despite the disproportional nature by which Caribbean financial centres are growing their tax base in G20 countries.
“In addition to that, we now have to be spending in the Caribbean a lot more effort trying to be viewed as OECD-compliant while we are collecting less revenue. So it really is quite a bad situation to be in and it puts a lot of pressure on governments,” added Robinson.
As a result of tax evasion and avoidance, among other practices, closer scrutiny has been placed on cross-border and international inter-company transactions.
“And the scrutiny is to the nature and as to whether or not something can be bundled, which means you get a higher corporation tax rate,” Robinson explained.
She said there was now a lot of focus being placed on tax collection in the region and some countries in the southern Caribbean had therefore been forced to introduce a number of measures including the introduction of a value added tax system and increase licence fees on international financial services sectors.
“Everybody is scrambling for some sort of mechanism to raise taxes,” she said.
The region could soon see more modified legislation and more tax information exchange agreements and double taxation agreements as we see more adoption of international standards, said Robinson. (MM)

LAST NEWS