International Business Week
The recently held International Business Week was an attempt by the international business sector (represented by the Barbados International Business Association), key Government stakeholders and other private sector partners to educate the Barbadian public on the sector and, in particular, the importance of the sector to the Barbadian economy.
Given that the international business sector was conceived way back in the 1960’s with the passage of the first International Business Companies Act, it is perhaps somewhat surprising that the awareness of the general public of the overall contribution of the sector to the economy is so low. Of course one explanation for this is that, although successive Governments have recognised the importance of the sector to Barbados’ present and future economic growth, neither the Government nor the private sector have devoted sufficient attention to raising the level of public awareness of the sector’s contribution to the economy and, by extension, to the standard of living enjoyed by ordinary Barbadians.
There is no doubt that all stakeholders recognise that this failure has been partly due to the lack of adequate statistical data demonstrating the sectors’ contribution to the economy. We know for example that the sector contributes approximately 64% of Government’s corporate tax revenue and possibly over 3,000 jobs. However, currently there are no meaningful statistics showing the contribution of the sector to personal income tax and national insurance as well as the many spin off benefits to other sectors, such as tourism.
As a result of this lack of public awareness, the growth of the sector has generally been hampered by a lack of broad based support from ordinary Barbadians as well as the allocation of adequate resources for product development, marketing and development of new markets.
The International Business Week initiative, though long overdue, was a good start to addressing the public awareness issue. However, there is still not enough importance given to the performance and contribution of the sector in the Central Bank’s reports on the economy. It is said that the reason for this is the lack of adequate data on the performance of the sector. Surely given the state of the art technology that is currently available, it should not be difficult to devise a system for collecting the relevant data, most of which reside in various Government departments, private sector entities and service providers.
What is needed is a commitment on the part of the private sector service providers and Government to work together, through the establishment of a working group, to quickly solve this longstanding and important issue. Until this is done, accurate measurement of the real contribution of the sector to the Barbados economy will continue to be problematic.
Developments in the International Arena
Events over the past 12 months have clearly demonstrated once again the determination of the developed countries of the G20 to severely restrict the ability of small financial centres, such as Barbados, to compete on a level footing in the international financial services arena. The global financial crisis and the resultant global recession have provided the G20 countries with the ideal opportunity to revive their efforts in this regard.
A good example of this is the move by the OECD, encouraged by the G20, to establish a global standard setting body in relation to tax transparency and effective exchange of information. This is being accomplished through the establishment of the Global Forum on Transparency and Exchange of Information for Tax Purposes (“the Global Forum”). This body was formally constituted at a recent meeting in Mexico of over 90 developed and developing countries. The Global Forum will be a stand alone organisation, similar to the Financial Action Task Force, with its own Secretariat and will be funded by its members.
The main responsibilities of the Global Forum are:
- firstly, to set global standards for transparency and exchange of information for tax purposes and
- secondly, to establish a “universal, robust, and transparent monitoring and Peer Review process’.
It is interesting and instructive to note that, although the Global Forum is meant to be the global standards setting body with respect to international tax cooperation, the United Nations, which has its own “Committee of Experts on International Cooperation in Tax Matters”, was not invited to attend the Mexico meeting.
What does all of this have to do with Barbados?
As many of you will recall, Barbados was not required to sign any kind of commitment to the OECD under its “Harmful Tax Competition Initiative”. Therefore, although Barbados participated in a previous meeting in Melbourne, Australia, of a Global Forum organised by the OECD, it did so as an observer. Additionally, Barbados was recently listed on the OECD’s “white list” as having substantially implemented the internationally agreed tax standards in relation to transparency and exchange of information.
However, it is understood that, following the recent meeting in Mexico, Barbados was invited to formally become a member of the Global Forum. One of the consequences of becoming a member is that Barbados would be subject to periodic peer reviews by other members of the Global Forum to assess its compliance with the internationally agreed standards. Arguably, one of the advantages of becoming a member is that Barbados will have a say, albeit limited, in ensuring that there is a level playing field in relation to the setting and application of the relevant standards.