Minister of International Business and Industry Ronald Toppin. (Picture by Reco Moore)
Barbados is off the grey list, which means this country is completely cleared and is no longer being seen as a non-cooperative jurisdiction for tax purposes within the global International Business sector.
The Council of the European Union (EU) made the announcement on Tuesday.
According to a press release on the Council of the EU’s website, “The Council adopted revised conclusions on the EU list of non-cooperative jurisdictions for tax purposes.”
The island is among 16 jurisdictions – Antigua and Barbuda, Armenia, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cabo Verde, Cook Islands, Curaçao, Marshall Islands, Montenegro, Nauru, Niue, Saint Kitts and Nevis and Vietnam) – which “managed to implement all the necessary reforms to comply with EU tax good governance principles ahead of the agreed deadline and are therefore removed from Annex II”.
Annex II refers to jurisdictions with pending commitments. The Cayman Islands, Palau, Panama and Seychelles have been added to the list of eight other countries already identified as non-cooperative tax jurisdictions. These territories did not implement the tax reforms they had committed to by the agreed deadline.
Croatian Deputy Prime Minister and Minister of Finance, Zdravko Marić explained, “The work on the list of non-cooperative tax jurisdictions is based on a thorough process of assessment, monitoring and dialogue with about 70 third country jurisdictions. Since we started this exercise, 49 countries have implemented the necessary tax reforms to comply with the EU's criteria. This is an undeniable success. But it is also work in progress and a dynamic process where our methodology and criteria are constantly reviewed.”
Minister of International Business and Industry Ronald Toppin said: “Reputationally, it sends the international signal that Barbados is serious about compliance, regulation and good tax governance principles that are fair to all. Barbados remains open for credible investors of substance and Barbados will continue to make strides in all areas in order to facilitate business.”
According to the press release on the Council of the EU’s website, “The list of non-cooperative tax jurisdictions, which is part of the EU’s external strategy for taxation as defined by the Council, is intended to contribute to ongoing efforts to promote tax good governance worldwide.” This was first established in December 2011.
The EU Code of Conduct Group assessed the tax policies of jurisdictions with no or only nominal tax against the criteria of ‘economic substance’ contained in the EU’s Criteria 2.2., which stated that a jurisdiction should not facilitate offshore structures or arrangements aimed at attracting profits that do not reflect real economic activity in the jurisdiction.
As a result, a list of non-cooperative jurisdictions for tax purposes was published in January 2019, under which a number of countries with no or only nominal tax was grey-listed based on their efforts of satisfying Criterion 2.2 by December 31, 2019.
In November 2018, the Organisation for Economic Cooperation and Development (OECD) implemented a new global standard on Base Erosion and Profit Shifting (BEPS) – Action 5 on Countering Harmful Tax Practices More Effectively. It was aimed at preventing business activities from being relocated to countries with no or nominal tax.
Many countries then sought to address these concerns through improved legislation. Barbados enacted the Barbados Companies (Economic Substance) Act 2018-41, which introduced enhanced economic substance requirements for tax purposes from January 1, 2019. (BGIS/SAT)