Thursday, April 25, 2024

EDITORIAL: A good name’s the game

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No matter what else may be confronting our country at this difficult economic time, the news that the international financial sector of our economy may be under attack from the OECD is bad news in any language. 
That sector was created in the 1970s by the Tom Adams administration, but both parties have now embraced the policy so that there is no political divide at policy level on this issue.
The consequences of this latest assault are clear. If international investors get the impression that we are not any longer complying with the OECD regulations, then they may look askance at Barbados when choosing a home for their investment companies and other like investment vehicles. Or if here already, they may leave.
Many international companies have established their subsidiary or other associated companies here as part of their matrix of domestic and offshore tax planning strategies.
In this way they maximize the use of their money and minimize their tax liability as part of a plan that often enables them to undertake opportunities that might be less than viable if the entity undertaking the venture was located in the head office of the metropolitan country.
It is a perfectly legal exercise – untainted by any illegality – and very often the interplay between the domestic tax legislation and the offshore location is an integral part of the exercise. It is a useful way of doing business and for small developing countries like ours, which are dependent on limited or non-existent natural resources, it represents a viable business opportunity.
Foreign exchange can be earned; good paying jobs can be created; and another column that helps to hold up the economy is established, which enables a competent government to reduce its rate of domestic borrowing and yet accomplish a high degree of social services that will redound to the national good.
Against this background this country has hitherto complied with the OECD regulations and maintained the cleanest background and status as an offshore financial jurisdiction. But all this is threatened now by the new yardsticks that have almost instantly caused our status to be challenged by the recent Global Forum Assessment that suggests we do not meet the current OECD standard.
We note that back in 2001 the then administration mobilized a response on behalf of itself and all the other countries affected by the challenges then; and we urge the present administration to similarly gird its loins and mount a pertinent response at all levels, both diplomatic and technical, where we can legitimately do so.
In this context we support the Government’s measures to amend the Income Tax Act to provide a domestic law basis for the exchange of information with tax treaty partners.
But we think that more must be done to train local lawyers in the esoteric art of international taxation because we must have a constant eye not only on the “moving goalpost” attacks, but also on developments in the industry. We have to keep ahead of the competition and keep our good name in the marketplace as a clean efficient state in which well heeled and other such investors and companies may make us their first-choice jurisdiction for international business.

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