In a global regulatory environment where transparency and accountability hold tremendous currency, Barbados trades on its reputation as a jurisdiction of substance with numerous multilateral agreements in place to promote exchange of tax information and reduce tax avoidance. The January 24, 2018, signing of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) has been a further signal to the international investment community that the island is serious about compliance and protecting their interests from undue international scrutiny. This has been further underscored by the public thrust by the new Director of International Business, Kevin Hunte, to upgrade and modernize his division through an increased use of technology to improve accessibility and processing times. Therefore, it was quite unexpected by the Barbados international business sector when the European Union (EU) ‘blacklisted’ Barbados on December 5, 2017, as a “non-cooperative jurisdiction for tax purposes” reportedly because it “has a harmful preferential tax regime and did not clearly commit to amending or abolishing it as requested by 31 December 2018”, according to the EU’s Economic and Financial Affairs Council. A charge that the Barbados Government swiftly and vehemently denied through a response by Minister of Finance, Donville Inniss, who outlined publicly the sequence of events and apparent miscommunications that led to the unwarranted development. After a series of diplomatic missives, Barbados was removed on January 23, 2018, from this list according to the Council as a result of having made commitments to address deficiencies identified by the EU. Much has been expressed about whether the composition of the list of non-compliant countries was politically motivated, and whether it was fair given the glaring absence of some well know tax secrecy jurisdictions in Europe and the United Kingdom dependencies. However, it would be naïve to forget that Barbados is a contestant in a competition that witnesses trillions of dollars in investment capital circulating through numerous international business and financial services centres daily. This type of challenge is not new to us, nor will it be the last one that we face on this front. Barbados remains committed to the work that lies ahead to fulfil its requirements in pursuit of compliance with the BEPS Action Plan by September 2018. This island is certainly well positioned to meet the requirements of substance and transparency because those are the bases on which we have always operated. However, we must not be complacent in expecting that this will be the last tax convention that we have to sign, or hoop that we must jump through. It is time for us to be proactive in anticipating the expectations of the global regulators and position ourselves not just to comply by deadlines but to devote the human and capital resources necessary to ensure that we get ahead of the next challenge. Investors want to be confident that, when they utilise our legislative and tax framework to reduce their cost of doing business, they are making a smart decision that will not put their business in jeopardy. The revelations exposed by the Panama Papers, and then the more recent Paradise Papers, emphasize that there is always someone observing and scrutinising the way in which the Barbados administration and corporate community conducts business. While privacy and secrecy are highly coveted by some investors because of the real security risks to which they could be exposed, the reality is that, in an environment where ‘tax fairness’ is becoming increasingly privileged, service providers have to tread a fine line in protecting the interests of their clients while complying with international regulations and best practices. Hacktivists are making this exercise even more perilous as they target databases of unsuspecting government offices and service providers, seeking to expose those who they believe are conspiring to not contribute a fair share. Protecting the reputation of Barbados and the legacy of our international business sector must remain a shared undertaking by those in government and those at the forefront of business development because the eyes of the world are upon us.

About the Author

Connie Smith
Connie Smith - Managing Director Tricor Caribbean Limited/Caribbean Corporate Services Ltd

Governance, Compliance and Risk professional with broad experience in the establishment and maintenance of corporate vehicles, particularly in Barbados and the British Virgin Islands. Managing Director, Tricor Caribbean.