One international business company is expressing renewed faith in the Barbados economy, following the dismantling of the old tax regime to meet international requirements.
In fact, stopping short of saying whether the company was considering relocating, Chief Financial Officer of Hyuna International Ltd Gregory Webster told Barbados TODAY that given that the country was now in line with other low-tax jurisdictions there was a greater level of confidence.
“I was extremely positive about the decision that the government made on the change in the [corporation] tax. We recognize that with the OECD [Organization for Economic Co-operation and Development] and the European Union’s push to reduce BEPS erosion, they were putting some extremely onerous pressure on Barbados. I think for the international business community, the 5.5 per cent is manageable because it is in line with other low-tax jurisdictions around the world that Barbados is competing with,” said Webster.
“Therefore, our company, because we have invested so much in Barbados, it fits in line with our model and we are very positive about the future to stay and continue investing in Barbados,” he said.
Webster was speaking to Barbados TODAY following a tour of his Balmoral Gap, Hastings company by officials of the Ministry of Labour and Social Partnership Relations on Wednesday.
Effective this year, Barbados established a new tax regime for organisations, where both local and international businesses are charged the same corporate tax rates on a sliding scale of between one and 5.5 per cent, depending on the taxable income of the company.
The decision allowed Barbados to meet its commitments to the OECD to safeguard against what it calls Base Erosion and Profit Shifting (BEPS) – an initiative designed to prevent companies from using planning or tax strategies to avoid taxation or to reduce the tax burden in their country by engaging in tax evasion or migrating intangibles to lower tax jurisdictions.
Previously, the offshore sector, offshore banks and locally incorporated international business companies would pay a corporation tax rate of 2.5 per cent while local business were subjected to a tax rate of 25 per cent, which was briefly increased to 30 per cent last year.
Data indicates that Barbados has only been gaining about $150 million annually from local corporation tax and between $300 million and $400 from offshore companies.