Barbados must sharpen focus as a financial centre
THE OFFSHORE SECTOR has always been major part of the financial employment generating and foreign exchange earning aspects of our economy, and along with tourism, it has helped to fill the breach created by the decline of sugar.
But the potential for that sector to do even more for the Barbadian economy can be gauged from the major input that it makes to the economies of The Bahamas, Singapore, The Channel Islands, Bermuda, The Virgin Islands and Britain itself which provides significant benefits to some persons who may live in Britain but are not domiciled there.
In a sentence, international financial planning is major business and major money, and many are the skills required for the proper financial planning that goes into the usual Treasury operations of most major international companies nowadays. Given the present state of international finance, our country needs to do everything in terms of training its people; studying the market and advertising our product availability in order to extract every legitimate advantage that we can from this important business avenue.
We raise this point yet again because it now seems clear that at the G8 meeting which is slated for next week and which Britain will chair there will be a massive assault against international tax avoidance. Essentially that is an attack on our offshore sector.
Moreover, the recession, which has bitten hard at the revenue intakes of major industrial countries, has provided the ideal cover for sabre rattling by a number of left-leaning (and some not so left-leaning) politicians who dislike tolerating large profits which yield the level of taxes paid which the tax laws allow.
We have returned to this topic because this new challenge appears to be more wholesale and widespread than any of the previous challenges. We had the World Trade Organization’s challenge, which wiped out a large swathe of foreign sales corporations that were said to be unfair and inimical to the interests of international fair trading.
We took that attack, counted our losses, along with the major American companies who have established their “foreign sales corporations” here, and we moved on. The Organization for Economic Cooperation and Development’s (OECD) challenge in 2001 was successfully fought off by us and we continued to grow the sector with the benefit of a flexible Canadian tax treaty, which was soon neutralized when the unique benefits were shared with other territories, and recently there were murmurings in Canadian circles about the alleged tax haven status of our country.
All these developments and challenges have now led, as it were, to the latest criticisms of major companies and the offshore financial sectors that they have used to lawfully lessen their tax burden.
We feel that it is imperative that this country should redouble its efforts at marketing our island as a financial centre. Even more critical, we absolutely must get on with the business of specifically training our accountants and lawyers in the highly sophisticated techniques of international tax planning – for while we may not be able to prevent G8 members from legislating as they please, we can keep two steps ahead by tailoring our relevant offshore laws to satisfy the altered demands of our international business companies and other such entities! But that approach calls for proactive planning. The stakes are high enough to make it worthwhile.