Barbados Central Bank questions accuracy of OECD report

BRIDGETOWN, Barbados, Wednesday May 29, 2013 – The Central Bank of Barbados says a recent report issued by the Organisation for Economic Cooperation and Development (OECD) is raising many “difficult issues not least of which is the need for an international coordinated approach on the rights to tax”.

The Central Bank, in a comment on the OECD “Addressing Base Erosion and Profit Shifting (BEPS)” report, said it notes the ongoing work of the Paris-based organisation of 34 countries founded in 1961 to stimulate economic progress and world trade.

The Central Bank said that BEPS report raises many difficult issues and that the “exercise should be of interest to everyone given the implications for investments, growth and employment. It is therefore important that the background information on which analysis is based be factual.”

The Central Bank said the OECD report notes that in 2010 Barbados, Bermuda and the British Virgin Islands received more foreign direct investment than Germany and Japan and that during the same year, these three jurisdictions made more investments into the world than Germany.

“In fact, Barbados’ contribution is the same as Malta, Kuwait, Gibraltar and Panama, none of whom are mentioned in the report,” the Central Bank said, adding that Barbados ranks at number 48 in the FDI table  and no other country with such a small contribution is mentioned in the report.

The Central Bank said the BEPS is receiving the attention of global leaders, particularly at this time when fiscal deficits prevail, and that Barbados also recognizes that the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes is an important element in the dialogue

“In this regard, Barbados continues to fully participate in the peer review process and recently concluded its phase 2 on site review,” the Central Bank said, adding “we acknowledge the need for an Action Plan which we hope will fully and carefully consider the BEPS initiative.

“In this regard, the data gaps mentioned in the report should be addressed and more insightful studies conducted that would better inform specifically on Multinational Enterprises (MNEs) and allow for firm conclusions  presumably from which changes in tax standards could be contemplated.

“In the interim while the Action Plan is being finalized for the July 2013 G20 meeting, we wish to dissuade the use of premature inferences and conclusions about Barbados.

“Further, the absence of reference to country by country data as is available for some jurisdictions mentioned in the report reinforces our view that it is misleading to in any way highlight Barbados in the limited analysis on foreign direct investment.”

The Central Bank said that from a wider perspective, the added danger of employing statistics as presented may paint a distorted picture of international financial centres in the region.

“We hope that the OECD Secretariat and focus groups working on the Action Plan will heed to this call and Barbados will remain vigilant in an effort to make a meaningful contribution to deliberations,” the Central Bank added.(CMC) Click here to receive free news bulletins via email from Caribbean360. (View sample)