Barbados has passed a major international test of its efforts to counter harmful tax practices more effectively.
The Organisation for Economic Co-operation and Development (OECD) has announced that following the latest peer review – conducted via its Forum On Harmful Tax Practices (FHTP) – Barbados has made significant progress in addressing harmful tax practices through the implementation of the international standard under Base Erosion and Profit Shifting (BEPS) Action 5.
Since the latest assessment shows that Barbados has met all aspects of BEPS Action 5-related commitments, the December 16, 2024 OECD publication Harmful Tax Practices – 2023 Peer Review Reports In The Exchange Of Information On Tax Rulings: Inclusive Framework On BEPS Action 5 said there were no recommended improvements for the country to make at this time.
This was confirmed on February 5 when the OECD stated: “At its December 2024 meeting, the FHTP updated conclusions for eight preferential tax regimes. In addition, the FHTP concluded its fourth annual monitoring process for the effectiveness in practice of the substantial activities requirements in no or only nominal tax jurisdictions. The Inclusive Framework on BEPS approved these results on January 31, 2025.”
As explained by the Barbados Revenue Authority (BRA), which is the national entity through which tax information is exchanged with other jurisdictions, the OECD defines BEPS as “tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations”.
Minimum standards
It noted that the Paris-based OECD “estimates that because of the BEPS practices countries have lost an estimated US$100 billion to US$240 billion in tax revenue annually which is equivalent to four to ten per cent of the global corporation income tax revenue”.
The BRA explained that as a member of the Inclusive Framework, Barbados is committed to implementing the four minimum standards.
These are Action 5 – Counter Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance; Action 6 – Prevent Treaty Abuse; Action 13 – Guidance On Transfer Pricing Documentation and Country-by-Country Reporting; and Action 14 – Make Dispute Resolution Mechanisms More Effective.
The latest review of Barbados’ implementation of Action 5 covered the calendar year 2023 a period for which the OECD said “Barbados has met all aspects of the terms of reference”.
“Barbados has international agreements permitting spontaneous exchange of information, including the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, amended by the 2010 Protocol and bilateral agreements in force with 40 jurisdictions,” the OECD report said.
“During the year in review, no exchanges were required to take place and no data on the timeliness of exchanges is reported.”
It added: “In the prior year’s peer review report, it was determined that Barbados’ process for the completion and exchange of templates were sufficient to meet the minimum standard.”
On past rulings, the OECD said no further action was required, noting that “Barbados’ implementation in this regard remains unchanged and therefore continues to meet the minimum standard”.
It added: “Barbados has the necessary legal basis for spontaneous exchange of information, a process for completing the templates in a timely way and has completed all exchanges. Barbados has met all of the terms of reference for the exchange of information process and no recommendations are made,” it added. (SC)
