Barbados is hopeful that it will be removed from a European blacklist of non-cooperative tax jurisdictions by next month, the head of the Barbados International Business Association (BIBA) has said.
Julia Hope said her organisation, which represents international business companies and offshore financial services, will be giving every support it could since Barbados “cannot be put in this position again”.
She was addressing a tax seminar at the Hilton Resort on Wednesday, where BIBA and tax officials answered questions from the audience on recent tax changes announced in the Budget.
Hope said: “While the OECD (Organization of Economic Cooperation and Development) appears to recognize how our new tax regime is akin to a rising tide that lifts all boats, it is unfortunate that the European Union has taken a much less enlightened stance toward our efforts.
“We simply cannot be put in this position again and I trust that once an agreement is reached with the EU that they will hold true to their commitments.”
In an effort to meet commitments to comply with the demands of the OECD’s Forum on Harmful Tax Practices (FHTP) by the end of last year, Barbados carried out sweeping changes to its tax regime, including a repeal of related laws, lowering of the corporation tax rate, and removal of a range of tax incentives.
This resulted in the OECD’s FHTP announcing at the end of January that Barbados was no longer under threat of a negative listing.
But in mid-March, the Council of the European Union named Barbados among ten countries added to the five already on its blacklist of non-cooperative tax jurisdictions.
The EU Council said the jurisdictions named on the list failed to implement commitments that they had made to the EU by an agreed deadline.
As such, Barbados faces the threat of “sanctions”, including reduced funding.
The EU Council said “Barbados has replaced a harmful preferential tax regime by a measure of similar effect and did not commit to amend or abolish it by the end of 2019”.
Hope told participants at the seminar: “We are continuing to look forward and BIBA, through its taskforce, has continued to support the Government in its efforts to get the EU to understand the fullness of what we are doing. I am pleased to say that the word from the Minister of International Business is that he is hopeful that we will be removed from the blacklist in May. Until then we will continue to support the Ministry [of Finance] in its dialogue with all relevant parties.
“We are not asking the EU to turn a blind eye to those states who offer safe haven to manipulators of the global financial system trying to hide criminal proceeds or evade tax. This is clearly not Barbados’ modus operandi. We continue to have a well-recognized legacy of tax information sharing plus robust financial and corporate regulation that can only be enhanced, not weakened, by the recent changes made to our corporate legislation.”
Pointing out that four laws were repealed, nine amended and three new ones introduced by the end of last year, Hope acknowledged that they had not come without some teething problems.
“We know there have been transitional issues since the new regime took effect from January 1, and our members have been relatively vocal about letting us know what is not working. We welcome this feedback as it has endowed us with the information needed for the BIBA Taskforce to take an in-depth review of the new and amended legislation,” she said.
Hope said that review was completed and the BIBA Taskforce has submitted recommendations for changes to government, adding that they were now awaiting Government’s action on those recommendations.
“The area causing most concern is the economic substance legislation because it is a new regime. Once the regulations and guidance notes for this economic substance legislation have been issued by government we will be organizing information sessions for members,” she said.