THE ISSUE: Financial sector under pressure
When it comes to the viability and good image of Barbados’ international business and financial services sector, there are some names that have come to be well known and equally dreaded by officials.
They include the Organisation for Economic Corporation and Development (OECD) and its Global Forum on Transparency and Exchange of Information, and in recent times the Foreign Account Tax Compliance Act (FATCA).
Add the words tax haven, evasion, blacklist, and exchange of information to the list and some stakeholders in the so called “offshore sector” will have recurring nightmares.
For the past decade small countries like Barbados which over time have grown their international business sectors have faced persistent and mounting pressure from entities like the OECD, which has said it is on a campaign to, among other things, curtail international tax evasion.
This has been done with the backing of the world’s largest and richest countries including the United States, Canada, and several European jurisdictions, which have been arguing that a number of their citizens are not paying their full share of taxes back home and that is a need for more information to be exchanged between them and domiciles like Barbados.
Minister of Finance and Economic Affairs Chris Sinckler touched on the challenges and pressure Barbados and its Caribbean neighbours continue to face in such circumstances last week when he addressed the opening of a regional pensions meeting at Hilton Barbados.
He spoke of “the ongoing harassment by the OECD” and “the very invasive and almost invective type approach of the US Congress on FATCA” and told participants that it was “absolutely critical to what we do to maintain the region as a pristine, well regulated and profitable jurisdiction for financial interventions”.
As far as FATCA is concerned, Barbados is negotiating a special bilateral agreement with the US Government to make the process easier, and in terms of the OECD the island continues to be engaged in a process where it has to conform to several requirements. Otherwise the unwanted tax haven brand could return.
Minister of International Business Donville Inniss has already sought to counteract comments that negatively branded Barbados in such a light, having met on several occasions with Canadian authorities.
“We sought to convey that Barbados is by no means a tax haven and I think that is one message that we put out there very clearly. We also impressed upon them that we as a country are serious about business based on the fact that we have excellent treaties that work and work well,” he said following such a meeting last year.
Dennis Howlett, executive director of Canadians For Tax Fairness, recently said that while Barbaods “has taken steps to increase transparency on tax matters” it was “in the country’s best interest to diversify its economy to reduce the reliance on the offshore financial services sector”.