Friday, April 19, 2024

A business to die for

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The disclosure yet another company is leaving our financial centre and relocating to the rival Bermuda jurisdiction is not a matter to take lightly. We earn large sums of foreign exchange from the international financial business sector, established in the late 1970s.
Indeed, we have got considerable revenue from this sector on the basis of small amounts of tax charged on profits made.
These companies spell then a twofold blessing for our economy, for not only are they large corporate taxpayers, but they earn and pay their taxes in foreign currency. This was the reason why the sector was set up – in the face of dwindling prices and increasing unprofitability of sugar.
We very sensibly established the sector on the pillars of our political stability and modern facilities and convenience; and, in the case of Canadian companies, we offered the additional inducement of the earned income exemption that allowed the Canadian offshore subsidiaries to repatriate their profits free of taxes, on the basis that we had already taxed those gains.
It was a niche that worked well since we were alone in offering this inducement in our double taxation treaty with Canada; but, alas, that facility has been extended to other jurisdictions, and so we are no longer unique in that respect and must compete on a level playing ground with the others.
Earlier this year we heard that a dozen companies or more were considering leaving; but news of an actual departure of a named company brings the difficulties into more dramatic focus.
The company once called Boivail Laboratories SRL, which has been operating here since 1991, is said to be employing about 25 staff  in high-paying jobs, and only three years ago established a $15 million complex in Welches, Christ Church.  
Its profile does not fit that of a business uncommitted to this jurisdiction, and we must seek to understand why this company in particular is leaving us and why some others have chosen to do likewise.  
It is difficult to build an international financial centre to the quality and capacity of our sector, for in the fast-moving pace of international business, our competitors are always keen to facilitate the industry by useful amendments to legislation to meet any new challenges facing registered companies.
We too must be alert to the movements within the industry and to the developments and nuances
of international tax planning. We must proactively change our laws and adapt our practices to retain our industry while ensuring we maintain at all times a clean, competitive and responsible jurisdiction.
We note the suggestions coming out of the consultation held on Friday last at Hilton Barbados by local stakeholders of the industry, and we venture to suggest that attention be paid also to the impact of local laws on those seconded here from overseas to manage and direct the fortunes of these companies.
We also feel that our system must be so flexible that while we continue to offer a treaty-based network for some companies, we must also provide for those entities not interested in utilizing the double taxation treaty provisions.
In a word, we must manage our offshore financial sector with a range of legal and administrative tools that speaks to a keen understanding of the needs of the sector. Concurrently, we must so monitor the activities of our major competitors, that we may keep abreast or even ahead of our rivals.
The attention paid to the sector will reap handsome dividends, and given our economic profile, we cannot afford to be other than vigilant and successful at attracting and keeping offshore companies.

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