Govt to urge OECD to give downgrade second-look

Government is to urge the Organisation for Economic Cooperation and Development (OECD) to revisit its latest peer review report, in which the island taxation compliance rating was downgraded, Minister of International Business Ronald Toppin has revealed.

And the association of offshore businesses domiciled here has thrown its support behind Government’s request for a review.

The report downgraded Barbados from a “largely compliant” to a “partially compliant” rating.

But Toppin explained that the rating was based on a three-year period prior to the current administration taking the reins of office.

Since the, the Mottley administration slashed its corporate taxation rates to level with with its international business sector rates in a bid to quell OECD labelling as a tax haven.

In a statement this evening, Toppin said: “The just concluded review focused on the three-year period, July 1, 2015 to June 30, 2018. Except for the single month of June 2018, this period preceded the current administration which took up the reins of government at the very end of May 2018.

“The Government of Barbados remains committed to the work of the Global Forum relative to international cooperation in the area of taxation, and in light of all that has been done by the current administration in relation to legislative amendments as well as the significant improvements made to ensure the practical implementation of the relevant laws and rules, Barbados will be seeking a Supplementary Review in accordance with the time stipulated.”

The OECD’s latest peer review report charged that Barbados’ compliance with its standards on transparency and exchange of information on request, had fallen from largely compliant to partially compliant.

The announcement came from the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes, and it said the “practical implementation of the relevant rules remains a challenge”.

Of the ten elements reviewed, three received a “partially compliant” rating, one received a “largely compliant” rating and six were found to be “fully compliant”. This resulted in an overall rating of partially compliant by the Global Forum.

Toppin insisted that since the Mottley administration came to office in May 2018, several necessary changes had taken place, and the country should therefore meet all the requirements.

He said the current rating came despite “the best efforts of the current administration because during the course of last year, this administration went to Parliament and amended the Companies Act, the Corporate and Trust Services Providers Act, the Limited Partnerships Act and the Societies with Restricted Liability Act”.

“It also repealed the Foundations Act. All of this was to have been done by the last administration by June 2018,” he explained.

He said Government has also managed to bring a number of companies under the purview of Corporate and Trust Service Providers so that they can be more effectively monitored for compliance with the requirement to have accurate and up-to-date beneficial ownership information.

Seeking to give further assurance that the country was more compliant than it was two years ago, Toppin said: “We have also requested, and obtained approval for additional staff for the International Business Unit (IBU) to enable it to be able to carry out on-site inspections and monitor compliance of the Corporate and Trust Service Providers and their clients with their legal obligations, both in relation to the requirement to have accurate and current beneficial ownership information as well as the need to have reliable accounting records.

“In addition, the Barbados Revenue Authority (BRA) has undertaken and completed a review of its internal processes in relation to the effectiveness of its communication with states legitimately requesting information, with the objective of ensuring that the quality of communication is much improved.”

Adding that the IBU would be working closely with the BRA, he said this was to ensure that information requested by the competent tax authorities of other jurisdictions was supplied in a timely manner.

He said: “In the interim, seven consultants were operationalised last year to conduct on-site inspections with the result that 46 such inspections have been done to date.

“Despite all of these efforts, which were noted in the OECD’s Report, they still gave Barbados a partially compliant rating because the period being reviewed was July 2015 to June 2018, and these actions had not been taken by the previous administration prior to June 2018.”

President of the Barbados International Business Association, Julia Hope, said her organisation was disappointed that Barbados had slipped down the rankings of the OECD 2020 Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Review to partially compliant.

But Hope said BIBA supported Government’s decision to request a review.

She said: “We recognise that the review period for this report came largely before the substantial amount of work that Government, with the support of BIBA, put into revamping its tax and regulatory environment since 2018”

“We believe that the supplemental review being requested of the OECD by the ministry will be of key importance in offsetting any negative fallout from the lower rating.

“We look forward to seeing the further measures that Government has put in place deliver improved results.

“We also understand that resources are needed to push the mandate forward. The International Business Unit, the Corporate Affairs and Intellectual Property Office, and the Barbados Revenue Authority will require greater capacity to respond quickly and efficiently to the increasing global scrutiny and demands.

“This additional scrutiny has already come at a cost to service providers in Barbados who pay fees for licences to practice in the sector to which are added the increased cost of compliance, which cannot all be passed on. We hope that Government bears this in mind given the challenges faced in recent years.”

Hope said she expected continued growth of the international business industry, adding that BIBA was committed to supporting the Ministry of International Business in ensuring that Barbados continues to improve its position as a jurisdiction for global business while maintaining the international standards expected. marlonmadden@babradostoday.bb