Barbados budget lowers minimum tax rate for international business entities
BRIDGETOWN, Barbados, Thursday June 28, 2012 - The Barbados International Business Association (BIBA) endorses the acknowledgment by the Minister of Finance, Christopher Sinckler that the international business sector is a vital source of foreign exchange in Barbados.
New BIBA President Ms. Melanie Jones described the 2012 national budgetary submission's treatment of the international business sector as "a measured recognition of the inescapable fact that Barbados’ heavy dependence on foreign exchange to pay its high fuel and consumables bills, demands that a serious and tangible effort be made to support and capitalize on the sector's potential to be the leading generator of foreign exchange for Barbados".
Ms. Jones confirmed that BIBA welcomed the lowering of the minimum tax rate for international business entities. She said this was a meaningful response to Barbados' recent loss of its competitive advantage in the Canadian market, due to the extension of the exempt surplus treatment to subsidiaries established in TIEA jurisdictions. Moreover it would also enable Barbados to stimulate new business based on the highly marketable lower tax regime, in other important jurisdictions such as the Latin American countries and the UK. The partner at Lex Caribbean acknowledged that Minister Sinckler’s projection of a tax revenue loss in the first year of implementation was realistic; but she added that BIBA was quietly confident that the enhanced tax regime would ultimately lead to an increase in the volume of business brought to Barbados, which would, over time, amply compensate for the initial loss.
Similarly, the provision for a special entry permit (SEP) system pursuant to which high net worth individuals and their families could secure long-term status in Barbados, was also welcomed by BIBA, Ms. Jones said. She noted that the collective of wealthy individuals in the United Kingdom cited by Minister Sinckler as our target for this product, would not be the only group to appreciate its attractiveness. Indeed recent engagement by BIBA and Invest Barbados in the Canadian market demonstrated a keen interest in developments of this kind within our immigration rubric.
Ms. Jones observed however that the potential inherent in these new measures to attract foreign investment would be squandered unless they were intensively promoted as part of a sustained effort to showcase Barbados as an hub for international business encompassing both international financial services and private wealth management. In this regard, while appreciating the multitudinous demands on public funds, Ms. Jones noted that in addition to the multi-million dollar reinvestment in tourism promotion announced by the Minister of Finance, a meaningfully increased allocation to the agencies charged with foreign investment promotion would have been warmly welcomed. This especially so, given the aggregate of almost $880 million, cited by the Minister, as the contribution by international entities to the Barbados economy by way of corporation tax revenues and additional spend within the local economy.
Ms. Jones cautioned that in addition to the marketing imperative, it is vitally important that the public and private sector energetically procure the evolution of our current business facilitation environment into one which is globally competitive by any objective standard. In that connection the Minister's announcements with respect to factoring and Fund Access were well noted; but the addition of measures aimed specifically at improving facilitative services critical to the retention and expansion of existing and new business, would have been valuable additions to the budget.
In concluding, Ms. Jones said that BIBA looked forward to the House of Assembly’s “international business legislation day” slated by the Minister to follow the post-Budget break. She affirmed that BIBA remains enthusiastically committed to collaboration with other stakeholders and with government on the optimisation of Barbados' legislative framework as a key component of its international business offering.