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Toppin complains about constantly changing tax rules

by Marlon Madden
5 min read
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Barbados is on a rollercoaster ride when it comes to keeping up with global tax compliance rules, but it will not roll over and play dead.

That declaration from Minister of International Business and Industry Ronald Toppin as he expressed frustration at the country having to constantly meet new international tax rules.

“It has basically been like a rollercoaster ride that you are constantly on,” he said, pointing to a constant shifting of the goal post or “change in playing field altogether” when it comes to taxation and reporting.

Toppin made the comments while contributing to debate on the Income Tax (Country by Country Reporting) Bill, which was presented in Parliament on Friday.

The legislation makes provision for country-to-country reporting on multinational enterprises earning US$850 million in a financial year in relation 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.

The law comes on the heels of a recent agreement among more than 130 countries for the establishment of a single minimum global corporate tax rate of 15 per cent, which the powerful G7 bloc of nations says is designed to get big businesses to pay their fair share of taxes.

The new minimum tax rate agreement, to which Barbados is a signatory, must be brought into law by 2022 so that it can take effect by early 2023.

Toppin said Barbados has always been obedient in putting legislation in place to remain compliant, indicating that some 14 such related pieces of legislation have been passed by the Mia Mottley administration since coming to office in May 2018.

“Barbados is a country that always really was known for having real companies, not shell companies, but they insisted they wanted that in a legislative format so we did that. We removed the preferential tax regimes and the ring-fencing and we passed the [Barbados Companies] Economic Substance legislation,” he said, giving examples of some of the most recent compliance measures.

However, Toppin expressed concern that even as new compliance requirements were met, powerful nations and multilateral agencies, which he referred to as “vultures”, continued to implement and call for new rules under “guise of another action” relating to base erosion and profit shifting (BEPS) tax strategies.

“So we went in one direction on their urging and they accepted everything we had done was correct and acceptable, and then like a wolf in the night they come and tell you now you have to do something completely different,” he said in reference to the new minimum corporate tax rate.

“After bringing 14 pieces of legislation here and structuring your life now along certain expectations based on their agreement, they come back now and tell you that you have to restructure all over again and play a different ball game,” he complained.

Though suggesting that Bridgetown may need more time to put systems in place to meet the deadline for the new global corporate tax rate, Toppin said “once again, in Barbados we have to face the reality that we have to find other methods now, because we intend to ensure that Barbados is a financial services centre of excellence”.

“We have decided to fight for this sector. This is a sector that was created by the Barbados Labour Party so we are not going to give this up. It is a rollercoaster ride – goal post changing, playing field changing every day – but at least I can tell you that despite the odds we have not rolled over and decided to die,” he said.

“We recognise that we have to fight with all that we have. One day countries in the world that are being affected the same way will decide that it makes sense to come together and fight together. I will be long gone and our grandchildren may be long gone before that happens but I realise we still have to fight.”

The International Business Minister said in addition to ensuring improvements in the ease of doing business, Barbados would continue to put bilateral investment agreements in place to ensure it attracted international business.

“We have and continue to work on a wide array of treaties. Currently, we have some 40 double taxation agreements in place with other countries and we have nine bilateral investment treaties, and I am happy to say we are actually preparing a model bilateral investment treatment, which is at an [advanced] stage.

“Investors like to operate in countries where there are bilateral investment treaties to ensure their investments are safe if all hell should break loose. So we have engaged the services of an expert on it and our treaty has been revised and I was just advised that the file may well be on my desk [this weekend] or by Monday,” he reported.

Toppin, who recently announced that he would not be contesting the next general election constitutionally due in 2023, suggested that international business should be a “stand-alone ministry” given the amount of work that is required. (MM)

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