BRIDGETOWN, Barbados, Monday April 13, 2015, CMC – Governor of the Central Bank of Barbados Dr. DeLisle Worrell says new challenges such as the Foreign Account Tax Compliance Act (FATCA) are affecting the island’s international financial services (IBFS) sector.
Addressing the fifth annual International Business and Financial Services Sector conference here on Friday, Worrell said that while the event provides an opportunity to reflect on the challenges and opportunities for Barbados “the challenges we face in the IBFS sector are of the same nature as the challenges our economy has always faced in international competition with players much larger than ourselves.
“The lessons of our past are that you must know your strengths and operate well within them, you must make a game plan based on those strengths, you must arm yourself fully with research and information, you should implement your strategy in a flexible, responsive way, and you should prepare and commit yourself for the long haul. These are the lessons we must apply in facing the new challenges in the IBFS sector.”
He told the conference that IDFS sector here faces new challenges, often referred to by acronyms such as BEPS, FATCA and FAPI rules.
“They are well known and I do not need to repeat them here, but they are serious and they affect our Canadian business, which is the bulk of our sector.”
FATCA is a United States federal law that requires United States nationals, including individuals who live outside of the country to have reported their financial accounts held outside of the United States, and requires all global non-US (Foreign) Financial Institutions (FFI’s) to search their records for suspected US persons for reporting their assets and identities to the US Treasury.
Worrell said in responding to the current challenges Barbados must play to its strengths.
“Our value proposition is that international companies can establish subsidiaries in Barbados to perform international transactional services that they would otherwise do in a major metropolis such as Toronto or New York.
“They are able to reduce costs and be more competitive because wages for skilled professionals in Barbados are so much lower. They are able to offer the same quality of service because Barbados boasts international levels of social and economic infrastructure, and excellent communications with North America, Europe and beyond.”
He said the island has regulatory and legal oversight systems that are constantly being upgraded in light of guidance from the Basel Committee, the International Monetary Fund (IMF) and the Financial Action Task Force (FATF) as well as the the Global Forum among other international bodies.
“We are constantly expanding our range of products. And we are not a tax haven; companies operating in Barbados, including IBC’s, are liable to pay corporation tax,” he said, adding that Barbados was also seeking new opportunities to strengthen IBFS activities, with the exploration of new markets in Latin America, Africa, the Middle East and elsewhere.
“We are also introducing new products and services geared to the needs of the various markets from which we draw our clients,” he said noting that the conference would also provide the opportunity “on how we may perfect our strategy and message”.
“We live in an interconnected world in which the execution and financing of international commerce is open to competition to all nations, large and small. We can be assured of Barbados’ future as a player in this global market, so long as we strive always to offer a superior value proposition,” he added.
Meanwhile, International Business Minister Donville Inniss, said the island is well placed to be marketed as the gateway to Cuba for US and other investors who may be ready to take advantage of the new opportunities being presented in Cuba.
“The knowledge that Barbados is one of the few countries which possesses Double Taxation Agreements (DTAs) and Bilateral Investment Treaties (BITS) with the United States of America and Cuba and their effective utilisation and impact on the international business environment among these states becomes more relevant to the international investor who wishes to do business with Cuba in light of the USA’s changing outlook.”
Inniss said, “given Barbados’ experience and knowledge in the effective operationalisation of these bilateral arrangements, it is well placed to provide an interface between those markets without stifling innovation and entrepreneurship, if well conceptualised and strategised.”