BRIDGETOWN, Barbados, Thursday September 7, 2017 – Minister of Commerce, International Business and Small Business Development Donville Inniss says he’s prepared to give some financial services and international business companies the boot if that’s what it takes to protect Barbados’ reputation. With the sector facing increasing scrutiny and mounting threats of international sanction, Inniss said it was important to maintain Barbados’ good name as a preferred jurisdiction in which to do business.
His comments came in light of tax reforms from the Organization for Economic Cooperation and Development (OECD), the latest of which is a multilateral convention to prevent base erosion and profit shifting (BEPS).
BEPS, considered a harmful tax practice, is defined by the OECD as tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.
International business and financial services jurisdictions also have to grapple with ring-fencing rules – where companies financially separate portions of their assets or profits for various reasons without necessarily being operated as a separate entity.
Addressing the recent ‘What Businesses need to Know about Base Erosion and Profit Shifting and Double Taxation Treaties’ seminar at the Savannah Hotel, Inniss said local authorities were engaging with the OECD forum, in relation to the new tax rules, “almost on a bi-weekly basis looking at templates provided and determine what changes need to be made in Barbados regime regarding the sector”.
“So, I throw a caution out to you that it will not be business as usual,” he told industry representatives, including officials of the Barbados International Business Association, the Central Bank and the Financial Services Commission.
Stating that Barbados was still addressing issues that were raised before BEPS, Inniss said now is the time for decisive action “in terms of what the new international business and financial services sector will look like”.
“I caution you that it will not be perhaps what it was ten or 15 years ago,” he said, pointing out that Barbados was making efforts to strengthen its regulatory regime while ensuring greater transparency.
“We can’t leave any stone unturned when it comes to compliance issues, when it comes to risk analysis and the ability to know your customer. At the end of the day, if we are to remain in the international business and financial services industry, we cannot compromise on a strong regulatory environment. It will create some discomfort to some clients, but at the end of the day we want business of substance that can fly under any radar and do no harm to this jurisdiction.
“So if we have to ask some companies to leave our domicile, we will do so in the most diplomatic manner. If it doesn’t work through diplomacy, we kick your butt through the door and ask you to go, but suffice to say, this industry is too critical for us to compromise in this area,” warned Inniss. (Barbados Today)