Barbados deserves credit for tax transparency

Barbados is proving to the world that a small country can play a big role in global finance, especially at a time when many countries are being pushed to improve how they share tax information.

Barbados chose not to resist or complain but to take real steps to strengthen its systems in order to play the long game. That long game is to ensure that its place as a global financial centre is secured, and it is positioned to thrive in an environment where the rules are constantly shifting.

Essentially, the island is demonstrating that it is serious about being a trusted player in international financial services, and as the goalposts shift, it is not prepared to throw up its hands in despair and resignation.

The recent report from the Organisation for Economic Cooperation and Development (OECD) shows that Barbados still has more work to do, but it also proves that the island is moving in the right direction.

In its response to the OECD’s Enhanced Monitoring Report, the government indicated that it was committed to transparency, cooperation, and strengthening the rules that protect the financial system.

The OECD report listed several areas where Barbados needs to improve. These include making sure beneficial ownership information is always available and up to date, ensuring companies keep proper accounting records, improving access to banking information when it is needed, and making information exchange more effective.

Some may focus on the fact that Barbados still has ten recommendations to work on and that two areas have not yet been addressed. But the more important point is that the island has already taken steps to address the gaps.

The country is already making progress on beneficial ownership information and the establishment of a national beneficial ownership register that is accurate and easy to access by competent agencies.

The island is also strengthening the supervision of companies, including smaller ones, with the formation of Business Barbados, to ensure they follow the rules.

In addition, the island has worked to ensure that even inactive companies maintain proper information.

Importantly, the administration’s attitude toward the OECD has been strategic and has come in for praise. It appears that the government has taken the approach that, instead of treating the global oversight as an unnecessary burden to which it should continuously resist, the posture appears to be “if you can’t beat them, join them”.

Since 2009, the island has been an active member of the Global Forum on Transparency and Exchange of Information for Tax Purposes. Also important was the island’s recent hosting of the Global Forum’s 21st Automatic Exchange of Information Peer Review Group Meeting.

When a country hosts such a meeting, it is a major signal of trust and respect from global partners. In a symbolic way, it shows that the world sees us as a reliable and capable jurisdiction.

Barbados also has an overall rating of “largely compliant” in the OECD peer review process. For many countries, this is not a small feat. Being “largely compliant” means the island already meets many of the required standards.

The government has already said it will address the outstanding issues, especially when it comes to updating beneficial ownership information.

In its response to the report – Global Forum on Transparency and Exchange of Information for Tax Purposes – the government stated: “The jurisdiction remains actively engaged in strengthening its legal and regulatory framework and ensuring the consistent and effective implementation of the Exchange of Information on Request standard.

“This reflects Barbados’ dedication to the cooperative and collaborative approach to international tax matters that has become a hallmark of engagement with global partners.”

One of the most positive things about the island’s response is that it accepted the areas that need improvement without hesitation and did not deny that there were gaps.

As the country prepares for its next self-assessment in 2028, it has already outlined the reforms needed to make systems stronger. These include better access to beneficial ownership information, stronger supervision of companies, and improvements in how information is shared with other countries.

As Barbadians continue to express concerns about the overreliance on tourism as the main engine of economic activity, it is important to recognise that by shoring up the financial services industry, it is creating the staging ground for sustainable economic diversification.