The disclosure today from officials of BIBA, the Association for Global Business, that Barbados is already suffering the consequences of the European Union’s decision to blacklist the island, is sobering.
Mr. Derrick Cummins, President of the organisation that is currently commemorating the twelfth year of hosting the now rebranded Global Business Week, has revealed that business which was in train for the island, was now being diverted to other jurisdictions because of our blacklisted status.
He observed that while Barbados has had a relatively good record of adherence to international guidance and regulations established by groupings such as the Organisation for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF), the bylaws and regulations for many global companies make it impossible for them to expand business into a jurisdiction that has been branded as not fully compliant with tax and anti-money laundering standards.
As a result, we are losing out on valuable foreign exchange for direct investment, required to keep our economy afloat.
We are aware of the national effort to have this country undergo a supplemental review in February 2021 as we seek to have the island’s reputation restored and our nation’s ability to attract needed foreign investment at a time when the economy’s main engine of growth tourism, is flat on its back.
We are no tax haven. International business companies registered here pay competitive rates of taxes. Our financial services sector is as legitimate as any other found in metropolis such as London, New York or Zurich.
The issue is as Mr. Cummins noted on the call-in radio programme. The EU et al, have focused their attention on destabilizing and dismantling the highly successful offshore business sectors in small nations like Barbados and others in the region.
They are not happy that these small, mostly island nations have developed a multi-billion dollar niche market that works to reduce companies’ tax liability and the industrialised nations are bent on removing that obstacle that stands in their way of returning those tax dollars to their home markets.
It is as simple as that. Though we do not diminish the dangers of money laundering and the financing of terrorism, we fear that these have now become shiny objects that divert attention away from the real reason why jurisdictions like Barbados are constantly under attack.
Each time a new rule is created by the OECD and we undertake the legislative and related requirements, a new standard of compliance is created. The bar keeps being raised and the hoops to jump through keep getting smaller.
Prime Minister Mia Mottley has led the charge, dispatching strongly worded protest letters to German leader Angela Merkel and EU president Charles Michel registering Barbados’ strong objection to the decision.
Mottley labelled the move most unfair and highly disproportionate. However, the European Council explained their actions this way. “The EU list of non-cooperative jurisdictions for tax purposes is part of the EU’s external strategy for taxation and aims to contribute to ongoing efforts to promote tax good governance worldwide.
“It lists non-EU jurisdictions that either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement reforms to comply with a set of objective tax good governance criteria, concerning tax transparency, fair taxation and implementation of international standards against tax base erosion and profit shifting.”
While Prime Minister Mottley blamed the last administration, saying the then Government repeatedly refused to answer requests from authorities in North America and Europe for tax information on international business companies that operate here, it has to be recognised that there was much more in the mortar than the pestle.
The EU’s action could not have come at a worse time for our economy. With four more months to go before we are expected to undergo a supplemental review, we can only hope that our business and global partners will understand the predicament we find ourselves in and understand this is a temporary status. It certainly does not represent the environment into which they are invited to operate.
Mr. Cummins, in a recent message to mark Global Business Week, explained just how important the sector is to the economy during the pandemic.
“Had this sector been impacted in the same way as others, it would have been devastating. Greater job losses, more burden on the National Insurance Scheme, less tax revenue to administer the Government’s operations . . . . Our sector has truly been a blessing this year for Barbados as it has been for many years.”
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