‘Legislation to make Barbados stand out’

’Government has introduced new law, which Minister in the Ministry of Finance Ryan Straughn believes will serve as a mechanism to attract new multinational businesses to Barbados.

The Income Tax (Country by Country Reporting) Act, will help govern the exchange of tax information on multi-jurisdiction companies between countries in which they operate for firms earning US$850 million or more annually.

Introducing the legislation in Parliament on Friday, Straughn gave the assurance that the move was part of a wider measure aimed at expanding and diversifying the Barbados economy, while keeping current with global tax regimes.

“We see these pieces of legislation that we have brought to this Chamber over the last three and a half years as a way for Barbados to be able to stand out and be able to open up Barbados to more international activity,” said Straughn.

He said in addition to being able to better “monitor” the business activities of large firms in Barbados, he also saw the new measure as an opportunity to be able to help to promote Barbados to the international community as a jurisdiction that is “well regulated”.

“Our focus now is to continue to expand the existing economy as it is but equally to add new and complementary activities that some of the existing services can help to support. By the same token, we are in a position to attract new activities and new business lines into the domestic space in order to help broaden the base of economic activity in Barbados,” he said.

Stressing the need to attract more “high-value” businesses to Bridgetown, Straughn said the Act will allow the Barbados Revenue Authority (BRA) to exchange required information on companies “with counterparties across the globe to ensure that we can focus on where profits are being generated [and] the level of taxation that will be paid in the various jurisdictions”.

The legislation makes provision for the annual filing of country-by-country reporting by the multinational firms with respect to revenue, profit or loss before income tax and income tax paid and accrued, number of employees and tangible assets other than cash in each jurisdiction.

Eligible companies have 12 months in which to do the filing, following the last day of the company’s fiscal year.

This law comes on the heels of a recent agreement signed by more than 130 countries, including Barbados, for the establishment of a single minimum global tax rate of 15 per cent, which the powerful bloc G7 nations say was designed to get big businesses pay their fair share of taxes.

This new minimum global tax rate would apply to companies earning just over US$850 million, and the agreement calls for countries to bring it into law by 2022 so that it can take effect by early 2023.

Straughn dismissed the suggestion that the Income Tax (Country by Country Reporting) Act was another way for governments to exercise control over large firms, explaining that it simply allowed for countries to better track the profit of multinational firms so that each jurisdiction was able to get its fair share of taxes.

“I know some persons out there might be tempted to think that it is some type of big brother system that is trying to look into people’s business, but effectively, I don’t perceive it as that,” said Straughn.

Adding that corporations were “getting more powerful” and that required governments to provide some level of defense to protect citizens and their rights, the minister said: “At the end of the day fairness in terms of where taxes are paid and the quantum, I think is important.”

“It is in the interest of jurisdictions to cooperate and have rules in which to exchange the said information so that there is order to the process, there is order and a sense of fairness and equity,” said Straughn.

“We must keep abreast with the fact that times are changing . . . and the reality is that tax authorities working together, is one mechanism of allowing us to keep up as it relates to regulations,” he said.
(MM)