The Business Blog – Panama Papers and the Threat to the Offshore Sector
Compiled by Due Diligence
In his April 28 column in The Nation, BEHIND THE HEADLINES: Time for Panama Papers fightback Tony Best wrote: –
Undoubtedly, Barbados will come under increasing pressure to reduce the presence of international investors in its offshore sector. And the heat will come from the US, Canada, Britain, France, and other OECD members.
There is no question that the small countries will be subject to new attacks, new blacklists and new sanctions because of all this. That’s what the high-tax nations and the international bureaucracies do. It is just like asking ‘why does a snake bite?
An April 29, article in the Toronto Star Canadians put $40 billion in tax havens last year quoting Dennis Howlett, executive director of Canadians for Tax Fairness, reinforced Best’s perspective.
Canada’s top two destinations for foreign direct investment are the United States and the United Kingdom. But rounding out the top five are three tax havens: Barbados, Luxembourg and the Cayman Islands.”
There might be a few resorts and golf courses (in those countries) but most of this money is not actually invested there,” said Howlett. “It goes through the tax haven and gets reinvested elsewhere. The returns on those investments are reported in places like Barbados, where there are hardly any taxes.
As a friend of Barbados and a taxpayer who has to write a cheque to Canada Revenue Agency in next couple of days for his 2015 Income Taxes, I am conflicted.
I recognize that the low income taxes paid by the Canadian offshore corporations and individuals domiciled or resident in Barbados comprise a significant share of the revenue that GOB requires to pay for its social services (and $7 million Independence celebrations). And, of course, they also employ a couple of thousand well paid Barbadian lawyers and accountants.
I also recognize that if those Canadian corporations and Canadians resident in Barbados were paying income taxes in Canada, the cheque I have to write would be smaller.
As Tony Best says “Undoubtedly, Barbados will come under increasing pressure to reduce the presence of international investors in its offshore sector.”
And that will undoubtedly lead to an exodus of international “investors” from Barbados’ offshore sector, and worsen GOB’s “cash flow” problem.
Finally, GOB should factor into its cashflow forecasting that with CIBC FCIB now about to sell insurance underwritten by the Trini insurer Massy United Insurance Limited, the revenue, profits and income taxes paid by the domestic insurers will negatively impact GOB’s cash flow.
Offshore jurisdictions were being placed under increasing scrutiny by the OECDs, the Panama leak will not serve to alleviate the scrutiny. Barbados has surrendered to a policy of transitioning to a service economy i.e. tourism and international business.
DD wants to see this matter discuss on BU.
Barbados Underground 
Ahhh…where should we begin. DUE…Bajans can also tell you how heavily taxed they are, so are you 100% sure that the money GOB gets from these offshore and double taxation/low tax/no tax relationships even benefit the people on the island.
Case in point, Panama Leaks, how does DGM benefit the island when they started there offshore in Barbados, but later moved on to Panama, exactly who benefits from that arrangement, cant wait for all the information to come out from the multiple ongoing international investigations…later this year
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Characters like Tony Best are always doing a lot of talking but seldom connect to the fundamental points. Their analyses, as they are, always go to predictable conclusions. No wonder we always seem to be going around in circles as a country. The same warm over talk from the same kinds of people.
The real truths include (1) that there are no bigger offshore centres in the world than in the United States and the other countries which seek to pressurize Barbados and other small island states. So the real issue is one about economic colonialism and not financial regulation per se.
(2) There are no regulations in any ‘tax haven’ we have seen which cannot be bettered by Nevada or Delaware.
(3) What Barbados is really doing is begging massa for a little piece of the action and when she gets a little bit too much massa then pretends that she is doing something untowards.
(4) Connect the dots. Why do you think the largest corporations and their directors domiciled within the US can consistently pay no or very little taxes?
We can go on and on but you can think for yourselves!
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Pacha…well known for decades, but the question is, are the people in Barbados, who are very heavily taxed, with or without the offshore arrangements, actually benefit financially, from the arrangement.
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” Stop laundering of plundered Nigerian assets via UK, reformers tell Cameron ”
https://www.rt.com/uk/341254-dirty-money-london-nigeria/
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Well Well
We cant ever tell. But the OECD countries play this stupid game all the time. We just had the Panama Papers – a big release just to implicate Putin. Not a single American corporation was mentioned. Is that not a CIA operation?
It’s time to tell the people some hard truths. Not the programmed lies.
It’s hard as hell to even open a bank account in Barbados but from my computer I have opened a bank in a certain domicile handling transactions in dozens of currencies.
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Lol…Pacha, those who benefited from the institution of slavery now pretend to be moralistic pure and respected, while benefitting from money laundering and tax evasion, same old criminals, just a different era.
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Some of the African leaders are still greedy beasts, same criminals, different era.
Bukola Saraki owns a 5.7 Million Euros property in Belgravia in his own name. #PanamaPapers | Sigh!
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@Due Diligence, well pointed. This is a subject that is critical to Barbados and its future economy.
The pressure against international tax planning by various groups, in Canada as documented in the article that you referenced as well as a number of other articles, is increasing.
Even the Canadian Finance Minister has stated that they are reviewing the situation with the Isle of Man, while others have called for scrutiny of the Cayman Islands and Barbados also.
Pressure against international tax planning is also increasing in Europe. Unfortunately, Pacha is quite right that the arguments depict a situation where a level playing field is not the goal.
In Europe, where are the criticisms against Monaco? In the US, where are the criticisms against Vermont, Delaware?
Add to this, the situation that every US citizen, wherever located, must file a US tax return and that banks, wherever located, must report account holdings and activity for those clients who are US citizens (FATCA), makes a very difficult path to tread.
We are now in a situation where every finance department seeks their share of a dollar, at least, once it is located or earned outside of their own jurisdiction.
I highly doubt that this same scrutiny is awarded to the casinos in Las Vegas. Businesses where cash is a huge method of dealing (in gambling I mean).
However, if one accepts that the large countries call the piper, then we have to deal with the issue as is.
As such, we have an issue that is more than serious, as it will impact our employment and foreign exchange earnings tremendously.
I am not optimistic about this, we are on a long rough road in this. I do see a time when international business here is significantly reduced.
That is my interpretation.
Onto the philosophical arguments.
I see it as a major mistake on the parts of the North American and European countries.
This, because what they are doing is pulling the rug from under many small, but necessary countries, largely allies and also pulling the rug from under arrangements that ensure the viability of international business transactions that do actually work in the interest of the economies of the NA and European countries.
The purpose of the Canada / Barbados tax treaty is/ was to ensure that Canadian companies could build up capital and compete in the international markets, based on this assistance.
Is this really a time to remove such benefit, because of some folks screaming loudly about the ‘big bad wolf’ who does not pay his taxes?
Actions based on mass hysteria cannot be sound. Unfortunately, recent cases like Apple etc, have shed unfortunate light on actions of large corporates.
However, can one crucify all on such basis or indeed, are they wrong at all to maximize their tax situation based on existing laws?
This is actually disturbing, that one seeks to amend laws, not based on specific legal or taxation principles, but merely to target specific types of operations or individuals.
I have a problem with that.
Of course, we can amend legislation to deal with what we see as unfairness etc, however, what I have a problem with is where such amendment is ‘target-based’ and not principle based.
Then, consider that such changes to tax legislation and international treatment is now being implemented at a time of serious political instability.
Is this choice of timing the wisest, or is it actually foolhardy?
I would suggest a bit more thought be placed on such action, at a time when the Middle East is a mess, at a time when all of the major nations are seeing some issues with their economies.
Yes, the instinct is to grab those taxes that you think are not being allocated appropriately.
My suggestion is that such a reaction may be the incorrect approach and instead of improving one’s own economy, would merely hamstring corporations and individuals and instead of one’s intent, actually cause more harm than good.
How much regulation do you actually want?
In summary, I think that more thought needs to be placed on this issue by the larger nations, rather than running into the woods with a machete, cutting all of the trees, with no thought as to the impact on the woods as a whole.
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DD wrote, ” Barbados has surrendered to a policy of transitioning to a service economy i.e. tourism and international business.”
Barbados mus reduce the dependence on this “business model” and diversify.
Start with Agriculture and Solar powered electricity.
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DD wrote “CIBC FCIB now about to sell insurance underwritten by the Trini insurer Massy United Insurance Limited,”
Maybe CIBCFCIB will become MCB ( Massey Caribbean Bank.)
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Two points to make:
Price at the petrol gone up again? Seriously? The public deserves to know how the calculation is done.
ICBL will not be covering over 800 NUPW (public workers) and if you add the cancelation of BARP policies, there you have it.
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Not sure if any of this matters…..read the attached,we appear to be in freefall.
wild-coot-development-bank-missed
https://shar.es/1eGz1H
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@David, Re the NUPW and BARP.
I saw that, it is likely that they will find another carrier, however, with somewhat higher premiums.
Which then brings us to the national medical industry and the seeming privatization of that, which was not on the cards when these public workers were putting their efforts into building Barbados, such that free medical care for many types of illness is not there anymore.
Has it become a situation where these people will feel abandoned?
Likewise for BARP. And with BARP, as with retired public servants, the issue is more difficult due to the aged demographic of the portfolio, which will further impact premiums for BARP, although for NUPW, the premiums should be cushioned somewhat by the working population, a younger demographic.
Is one possibility a scenario where the Government states and enforces action such that it places all worker medical plans, private and public, under the umbrella of one insurance company, to ensure that all get coverage?
This would mean that a company must bid for the national business (periodically, say every five years) and it would mean that all others would be left out then, at least from life and health insurance.
But maybe that is rational, as the population is around only three hundred thousand? Can we really support three or four life and health insurers?
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@Crusoe
With Barbados continuing to defend the title as the NCDs of the world why are we surprised at the consequences?
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David May 2, 2016 at 7:03 AM #
True there. Chickens coming home to roost I guess.
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@Crusoe May 1, 2016 at 8:31 PM
Thanks Cruse
Excellent discussion.
Let’s hear from others
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@Hants May 1, 2016 at 9:19 PM #
“Maybe CIBCFCIB will become MCB ( Massey Caribbean Bank.)”
Very good point
Back in 2002 CIBC partnered/combined with Barclays to form FCIB.
Then in 2006 Barclays baled out and exited the Barbados/Caribbean market.
Now FCIB is partnering with Massy.
CIBC’s bale-out may be just a few years from now
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http://www.nydailynews.com/news/national/bitcoin-creator-craig-wright-article-1.2621279
Yes indeed, one must watch out for these take overs or attempts at take over.
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The observation about Massy is interesting. It is obvious if we look at its pan Caribbean reach, interest in insurance etc it is bulking up to play a serous role. The alliance with Cibc Fcib bears a look.
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David May 2, 2016 at 12:25 PM #
Indeed, the old ‘import and retail’ that so many of these ‘corporations’ have been built on, can only go so far. Insurance etc are viable services that can be lucrative.
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@Crusoe
Given the demise of CLICO that some attribute to poor governance by regional regulators one wonders what improvements were made as we observe Massy bulking up.
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A country managing a difficult economy, for 7 years and counting, needs to take the business of reporting on the economy ver seriously. The ambivalence expressed by Mr.Harrison does not cut it.
http://www.nationnews.com/nationnews/news/80772/prompt-bank-reports
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Perhaps the cabinet can learn from Zimbabwe where President Mugabe is about to sign a bill that will make the likes of Clico,Parris,Thornhill.Woody Davis,Leslie Haynes,Basil Springer and the senior managers jointly and severally liable for any losses of depositors and further without prejudice to any other criminal charges,these officers are liable to a term of imprisonment for a MINIMUM of 10 years
http://www.herald.co.zw/president-to-sign-banking-amendment-bill/
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Lol…oh what a night that would be for Leslie Haynes et al.
I agree the directors should also be held liable, for that level of thievery in insurance companies.
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We cannot build a sound economy on financial gimmickry . Worse, when it comes at the expense of the Big Boys. Like it or not , It’s their WORLD and they set the rules…even when there is blatant double standard. The USA marijuana industry comes to mind. The tax haven model is not fair and sustainable. No wonder we life in a society, so unequal today, more than anytime in human civilisation. The devastation on Africa’s societies- by these multinationals and their offshores subsidiaries domiciled in tax havens-speaks volume.
Since the servicization of the economy, we have become a rentier state, through financial gimmickry and various ponzi schemes.
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@ Due Diligence May 2, 2016 at 10:42 AM
“Maybe CIBCFCIB will become MCB ( Massey Caribbean Bank.)”
Very good point
Back in 2002 CIBC partnered/combined with Barclays to form FCIB.
Then in 2006 Barclays baled out and exited the Barbados/Caribbean market.
Now FCIB is partnering with Massy.
CIBC’s bale-out may be just a few years from now…”
But DD, that is exactly what the miller some time back told you could happen.
The insurance business is just the first move towards full integration and then a Barclays-like dumping.
Shell and then ESSO did it with SOL, so why can’t Barclays and CIBC.
The oil industry and banking are undergoing major structural changes. The East Caribbean is not part of the future for transnational corporations in these sunset industries.
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Appears no one can tell what benefits, if any, the low tax/no tax/double taxation treaty have for the citizens on the island, what are the financial benefits, we know the offshore clients save millions by not paying taxes in their countries, in their currencies, does that translate to millions going into Barbados.
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Offshore tax havens are zero sum game endeavors and race to the bottom outcome . Nobody likes paying taxes, but those who should pay their fair share should pay their fair share . Caribbean states shouldn’t enable or model their economy on this type of rent seeking behavior.
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@fortyacresandamule
Then we add the latest fad, citizens by investment (CIB).
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I am not so conflicted.
You know if there is a fence where Canada will sit? Squarely on top of it.
Perspective?
Canada has 90+ tax treaties.
https://www.fin.gc.ca/treaties-conventions/in_force–eng.asp
Hence I view the one with Barbados as an “informal form of aid”.
Canada has a mind blowingly complex tax system, filled with a gazillion tax loopholes. My point is your inference that if Canada were collecting more tax (from closing the Barbados loophole as an example, assuming those companies/persons wouldn’t transfer to another similar jurisdiction) it would be reflected in lower taxes in Canada. I think not.
Politically, no question destinations for IBC’s like Bim, will be placed under the microscope. Yet, this is more like getting caught in the cross fire of a bigger war; our target is misguided because we are easy prey. It deflects from the bigger, and more politically sensitive fish.
Remember, any jurisdiction can levy a tax, collecting it is far more difficult.
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@ David,
Seems the best brainiacs in Barbados retire and then show how bright they are.
Wild Coot is a great source of information.
http://www.nationnews.com/nationnews/news/80755/wild-coot-development-bank-missed
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“The following letter was sent today to UK Prime Minister David Cameron by Nigerian civil society organisations, including Transparency International’s partner Civil Society Legislative Advocacy Centre (CISLAC):”
http://www.transparency.org/news/pressrelease/nigeria_civil_society_letter_ahead_of_international_anti_corruption_summit
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@Hants
When Adrian asked the question to Butch Stewart at the BCCI luncheon he was laughed out of the room by Barbados’ best captains of industry. We are seeing it come to pass our officials boasting of record tourists arrivals yet there is not the incremental increase in forex reserves.
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@David May 2, 2016 at 6:05 PM
Could it be because the US$ paid by Butch’s guests go to Butch’s bank accounts in Miami, New York, Toronto and London (and Panama), and Butch sends enough Bajan Bucks to cover wages, a few local supplies and utilities.
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@NorthernObserver May 2, 2016 at 5:23 PM #
An “informal form of aid” indeed.
DD just hit the send button in TurboTax, so will be sending my share of the aid to Canada Revenue Agency as soon as they send me the bill
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Caribbean leaders to discuss banking concerns with Biden – Latest News
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@David. The most of the tourism dollars stay offshore. What is remitted to Barbados is just enough to pay local bills. And those earnings that are captured in BIM have a high leakage rate. Tourism arrival and foreign exchange earnings are journal entry exercise. Those statistics have marginal impact on the NIR( net international reserve).
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So..the citizens actually benefitting significantly from tourism is questionable and has been for many years, since it’s only foolish people would think the money is actually spent or enters the island, except for overheads…
The citizens benefitting significantly from the offshore arrangements are also highly questionable, except for a few jobs on island, the offshore dudes quickly move to other jurisdiction, while still having offices on island…
The citizens in Barbados are very heavily taxed, it does not add up.
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@fortyacresandamule
Found this interesting report that researches ‘leakage’ in the tourism sector by developing countries p.22.
Click to access giz2013-en-tourism-exploring-the-leakage-effect.pdf
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@David May 2, 2016 at 8:07 PM
The thesis is interesting, but way over DD’s pay grade. DD suggest it should be required reading by the MOT, MOF and the GUV.
We know that much of Sandals revenue does not reach the tourist receiving countries (Barbados et al). Wonder how many others – Elegant bookings are throughout Ft. Lauderdale. Hilton, Radison, Marriott? Wyndham?
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@DD
as you know CIDA got rolled into some other body.
Here is one small report, which will tell you why it is no longer.
Pick your libation of choice. I bet you cannot get past p20, which of course was exactly the intent of the authors LOL
Click to access dev-riap-pri11-eng.pdf
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We have got to keep a close eye on these cabinet ministers jetting off to Cuba to do business. They may stopover in Panama to collect their ‘savings’ and put it in a more secure place, as Leroy Parris did , in the Barbados Central Bank.
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Due Diligence May 2, 2016 at 6:35 PM # @David May 2, 2016 at 6:05 PM
Could it be because the US$ paid by xxxx’s guests go to xxxx’’s bank accounts in Miami, New York, Toronto and London (and Panama) and Cayman Islands, and xxxx sends enough Bajan Bucks to cover wages, a few local supplies and utilities.
…
And likely many other operations are ditto… certainly hotels. Take the bookings online, into Cayman account.
Including distribution / retail.
Supposing I buy Bushweedwhackers or CheapAC’s, I set up a Cayman company, buy them for USD35 each from China, take a (non-taxed) profit of USD200 in Cayman, Caaman invoice Barbados USD235, Barbados imports and sells for equivalent of USD350.
So, some profit in BIM but most in Cayman.
Just speculating of course.
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@Crusoe
It is fairly well known several Bajan companies have set up companies domiciled in St.Lucia to manage payments to local companies in Barbados and to pay salaries. Many of them receive US dollar payments.
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to “manage payments”….u planning on running in the next election?
I would alter the flow suggested….all he forgot were the inter company management fees to drag the profits to zero or less. You have no tax to pay if you have no profits?
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@DD
We have to look at oil price inching upwards and likely impact on high oil import countries like Barbados. This concern against anemic growth in Barbados’ oil reserves.
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@ David,
https://www.thestar.com/news/canada/2016/05/03/kpmg-pressed-for-details-on-isle-of-man-tax-scheme.html
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The Panama Leaks was the catalyst needed to expose the whole show of hypocrisy that world leaders have instigated against taxpayers of the poorer variety for many decades…..it will now all come out in the wash.
Bless cyberspace. .
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The search for evaders (and avoiders) has just begun.
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Here are a couple of articles from today’s newspapers that Donville should read.
Tax-avoidance schemes becoming taboo, finance committee hears
http://www.theglobeandmail.com/news/politics/tax-avoidance-schemes-becoming-taboo-finance-committee-hears/article29847423/
“Mr. Wiebe also said that growing attention on international tax practices has led KPMG and its clients to go beyond strict legal considerations and weigh the public perception of any potential arrangement.”
Accounting giant KPMG defends Isle of Man tax practices before House committee
http://business.financialpost.com/news/economy/account-giant-kpmg-defends-isle-of-man-tax-practices-before-house-committee
An investigation by journalists found the Panama law firm Mossack Fonseca had registered more than 100,000 shell companies in cheaper tax jurisdictions like Barbados, the Cayman Islands, the Isle of Man and the British Virgin Islands, and implicating clients including celebrities and politicians.
In response to a question from the finance committee on Tuesday, Wiebe focused on activities in Barbados, saying Canadian-based multi-nationals locate operations in that country “because Canada has a trace treaty with Barbados.”
“The profits earned in that particular jurisdiction are taxed at a rate of 2.5 per cent, instead of the 25 per cent that they would have if it was profit from Canada,” he said. “Barbados doesn’t have a lot of natural resources. The only way they’re going to get jobs or create a finance industry or whatever is to create an advantage — that advantage is a very low tax rate, which Canadian businesses take advantage of.”
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DD quoted “The only way they’re going to get jobs or create a finance industry or whatever is to create an advantage — that advantage is a very low tax rate.
You cannot build an economy on a low tax rate / haven. Barbados needs to find an alternative.
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Exactly Hants…these firms are hiding millions of dollars in profits in these shell companies and the onyy thing Barbados has to show for it are a few jobs….wuh the local people hired at these companies are paying more taxes locally in Barbados than all the offshore companies combined, as am sure these offshore companies generate less than 4 thousand jobs.
Besides, these offshore companies make out like bandits, I registered a company in Toronto and within 2 months Canada Revenue had tax forms mailed to my address.
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And besides Wiebe could give a shit if the people in Barbados starve, all he cares about are the clients who are paying big money to prevent themselves paying 25% of their earnings in taxes, that money contributes to his salary.
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@Hants
Not so much alternatives but diversification to buffer shocks.
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I mean on thinking of this, could the local governments not charge the offshore tax evaders at least 10%….2.5% is out and out tax evasion and puts more pressure on local taxpayers to make up the shortfall, it would also had gone a long way in not seeing the island as a tax haven to be blacklisted.
The local politicians have no negotiating skills and are jackasses, as a business person, I would gladly agree to pay 10% taxation as opposed to paying 25% in Canada….what a bunch of idiots. The tax evaders save hundreds of millions of dollars, some billions, by not paying their fair share of taxes and could well afford 10%, which would have gone a long way to seeing Barbados as a more bonafide offshore jurisdiction, as opposed to a fly by night tax haven.
The time the politicians wasted gaining a bad reputation for themselves and the island by being dumb, that same time could have been better spent distributing taxpayer contracts evenly to small business people without looking for a bribe in return, building the agricultural and manufacturing sectors with the whole population involved, taking care of the social problems, building a significant export market, relying less on imports, had they started this 30 years ago instead of doing the opposite, both political parties would not now be seen as utterly useless, utterly self-serving and utterly corrupt.
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WW&C
Apologies for the length of this post.
As I have said before, DD is not an accountant or economist; but from my modest understanding of such matters the Gildan/Barbados relationship seems like a good deal for Barbados and Gildan.
Gildan Activewear Inc. is a public company with headquarters in Montreal, Quebec, Canada.
Gildan’s sales in 2015 were US$3 billion.
Gildan paid income taxes of US$4.5 million in 2015
Its subsidiary companies include Gildan Activewear SLR in Barbados.
See Gildan’s 2015 Annual Report at:
Click to access 2015_AR_FINAL_ENG.pdf
“WHO WE ARE
Gildan is one of the world’s leading manufacturers and marketers of quality family apparel, including t-shirts, fleece, polos, underwear, socks, sheer hosiery and shapewear. Sold in over 50 countries, our family of brands includes Gildan®, Gold Toe®, Anvil®, Comfort Colors®, Secret®, Silks®, Powersox®, Kushyfoot® and Therapy PlusTM, complemented with licenses for Under Armour® and Mossy Oak®.
Through our vertical integration in manufacturing, we control every step in the process of producing our apparel, from raw materials to finished products. We operate more than 25 facilities in North America, Central America, the Caribbean Basin and Bangladesh, employing over 42,000 employees.
At Gildan, we leverage our entrepreneurial spirit, our empowered employees and a fundamental belief that operating responsibly is the only way to create value in everything we do.”
It might be added that Gildan leverages various tax treaties, by which it was able to pay income taxes of US$4.5 million on earnings before income taxes of US$309 million – an effective tax rate of 1.5%.
Gildan does have a small manufacturing facility in Montreal, but the bulk of its manufacturing is done in Honduras (4 facilities), Nicaragua (3 facilities), Dominican Republic and Bangladesh.
A 2008 story at http://businessbarbados.com/industries/manufacturing/the-gildan-success-story/ includes “Gildan’s facility in Barbados currently employs 110 employees and is responsible for all the marketing, sales, sales support and administration functions required to drive the corporation’s worldwide sales and growth initiatives. Every customer worldwide submits their purchase orders either electronically or facsimile or even by telephone through our Barbados office where each order is processed, analyzed against forecast, credit approved and eventually released for shipment to one of our strategically located distribution centres around the world.”
By now, in 2016, Gildan’s facility in Barbados probably employs about 300 of its 42,000 global employees.
According to its 2015 Annual Report “The Company’s income tax provisions and income tax assets and liabilities are based on interpretations of applicable tax laws, including income tax treaties between various countries in which the Company operates as well as underlying rules and regulations with respect to transfer pricing. These interpretations involve judgments and estimates and may be challenged through government taxation audits that the Company is regularly subject to. New information may become available that causes the Company to change its judgment regarding the adequacy of existing income tax assets and liabilities; such changes will impact net earnings in the period that such a determination is made.”
With Gildan structured so that all the marketing, sales, sales support and administration functions are administered through its Barbados facility, it is able to minimize its income tax rate (1.5%) largely through the Canada/Barbados income tax treaties.
More from the 2015 Annual Report
“Factors or circumstances that could increase our effective income tax rate
The Company benefits from a low overall effective corporate tax rate as the majority of its profits are earned and the majority of its sales, marketing and manufacturing operations are carried out in low tax rate jurisdictions in Central America and the Caribbean Basin. The Company’s income tax filing positions and income tax provisions are based on interpretations of applicable tax laws, including income tax treaties between various countries in which the Company operates as well as underlying rules and regulations with respect to transfer pricing. These interpretations involve judgments and estimates and may be challenged through government taxation audits that the Company is regularly subject to. Although the Company believes its tax filing positions are sustainable, we cannot predict with certainty the outcome of any audit undertaken by taxation authorities in any jurisdictions in which we operate, and the final result may vary compared to the estimates and assumptions used by management in determining the Company’s consolidated income tax provision and in valuing its income tax assets and liabilities. Depending on the ultimate outcome of any such audit, there may be a material adverse impact on the Company’s financial condition, results of operations and cash flows. In addition, if the Company were to receive a tax reassessment by a taxation authority prior to the ultimate resolution of an audit, the Company could be required to submit an advance deposit on the amount reassessed.
The Company’s overall effective income tax rate may also be materially adversely affected by the following: changes to current domestic laws in the countries in which the Company operates; changes to the income tax treaties the Company currently relies on; an increase in income and withholding tax rates; changes to free trade and export processing zone rules in certain countries where the Company is currently not subject to income tax; changes to guidance regarding the interpretation and application of domestic laws, free trade and export processing zones and income tax treaties; increases in the proportion of the Company’s overall profits being earned in higher tax rate jurisdictions due to changes in the locations of the Company’s operations; and changes in the mix of profits between operating segments; or other factors. For example, the Organization for Economic Cooperation and Development (“OECD”), an international association of 34 countries, recently issued recommendations regarding international taxation, which if adopted by and between the tax authorities in the countries in which we operate could result in a material increase in the Company’s overall effective income tax rate.”
So, Gildan manufactures nothing in Barbados, but presumably all or most of the US$4.5 million income taxes it paid was to Barbados, it employs a few hundred clerical level people, and a few accountants and tax lawyers.
And makes campaign donations? In Canada and Barbados.
And makes campaign donations?
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“Gildan does have a small manufacturing facility in Montreal, but the bulk of its manufacturing is done in Honduras (4 facilities), Nicaragua (3 facilities), Dominican Republic and Bangladesh.
A 2008 story at http://businessbarbados.com/industries/manufacturing/the-gildan-success-story/ includes “Gildan’s facility in Barbados currently employs 110 employees and is responsible for all the marketing, sales, sales support and administration functions required to drive the corporation’s worldwide sales and growth initiatives. Every customer worldwide submits their purchase orders either electronically or facsimile or even by telephone through our Barbados office where each order is processed, analyzed against forecast, credit approved and eventually released for shipment to one of our strategically located distribution centres around the world.”
By now, in 2016, Gildan’s facility in Barbados probably employs about 300 of its 42,000 global employees.”
Yes Due…and makes campaign donations, that’s why I am wondering where and who the US 4.5 million dollars go to, seeing Gildan makes out as a bandit by manufacturing and utilizing the cheapest of world labor, view my copied excerpts abive…., 4.5 million is nothing and will not cause any hiccup in their bottonline, not even if it was tripled.
But, how much in that 4.5 million goes into politicians pocket as campaign finance etc, exactly how much reaches the treasury, i wonder.remember, they only hire 300 people on the island, they been around long, because in 2004, on passing through I noticed them, so they had to have been on the island for over 15 years.
US $309 million in earnings is over 1/4 billion Bds dollars, at a tax rate of 1.5%….. and here i was thinking it’s 2.5%…stupid me.
So now you see my point Due.
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Particularly if Gildan had to pay 25% of their annual earnings….a 1/4…. to Canada Revenue.
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WW&C
Let’s give Gildan the benefit of the doubt, and assume the US$4.5m million (BDS$9.0 million) was paid to the Barbados Treasury; and the money that goes into politicians pockets as campaign finance etc is expensed as an SG&A expense.
If Gildan were paying to CRA @ 25%, it would have been US$77.25 million (CAD$100.4 million), but thanks to the Canada/Barbados income tax treaties Canada probably gets next to nothing of the Gildan income tax.
And Honduras, Nicaragua, Dominican Republic and Bangladesh – they are happy to have those 30-40,000 manufacturing jobs at the cheapest of world labor costs.
The BDS$9.0 million income tax represents a big chunk of GOB corporate income tax/offshore revenue; probably one of the largest from from all of the offshores.
The BDS$9.0 million income tax is probably more than the combined income taxes paid to Treasury by COW, Bizzy, Sir Kyffin, Bjerkhamn and Maloney.
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Due…..but in reality Gildan is hardly paying any taxes at all to Barbados treasury compared to what they are saving by not paying in Canada….and that campaign financing which should be available online as part of public record, put there by the government, is not available. Gildan is the one volunteered the information.
Campaign financing should be public record…made available for everyone to see.
And if you say Gildan is more likely paying more than the other offshore companies, as we clearly see, the country is still in financial difficulties, exactly where are the benefits to the citizens.
It’s clear the island is operating as a tax haven and not just as a low tax jurisdiction….low in my estimation is 10%, not 1.5%, they are enabling tax evaders, it’s quit obviousm dont care what that ass Dumbville says.
COW, Bizzy, Sir Kyffin, Bjerkhamn and Maloney….and dont let us start on these thieves who believe themselves entitled, we can be sure, if they pay any taxes they take back triple the amount in contracts, given to them by crooked politicians.
I am told daily, the transport board buses break down on the road….Simpson has had that contract for years and things keep getting worse because the buses are deterioating, but the scam is alive and well.
Can you imagine what the other offshore companies are paying in taxes if Gildan is paying 1.5%…..that is highway robbery, who would negotiate that onesided agreement, only jackasses.
The citizens pay 17.5% taxes, even on food.I am not sure of the tax brackets for workers, but all I hear is that they are owed returns and dont get them.
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Fact Sheet: Obama Administration Announces Steps to Strengthen Financial Transparency, and Combat Money Laundering, Corruption, and Tax Evasion – Actions build on ongoing efforts to combat money laundering, corruption, and tax evasion
https://www.whitehouse.gov/the-press-office/2016/05/05/fact-sheet-obama-administration-announces-steps-strengthen-financial
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http://www.theguardian.com/news/2016/may/06/panama-papers-source-breaks-silence-over-scale-of-injustices
Due…read this post from Gabriel.
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WW&C
“Gildan is the one volunteered the information.”?? Gildan is a public company. The income tax number (US$4.5 million) is from its 2015 Annual Report, so I do not understand what it volunteered.
Campaign financing disclosure?
Here are a couple of interesting links.
Click to access 43.pdf
Written by Peter Wickham and Dale Marshal some time before 2008, it ends with the following.
“Parties are therefore unlikely to maintain records of party spending and financing in order to maintain the anonymity of party financiers and well wishers. This leads one to conclude that the unregulated nature of political party financing in Barbados is a process generally shrouded in secrecy, a lack of transparency and accountability to the public at large.”
I am guessing that nothing has changed, except that the Ruling Party and the Opposition Party are reversed.
I love the term “well wishers”
https://barbadosunderground.wordpress.com/2013/02/26/campaign-finance-reform-needed/
“Can you imagine what the other offshore companies are paying in taxes if Gildan is paying 1.5%…..that is highway robbery, who would negotiate that onesided agreement, only jackasses.”
I think it was you who said the Canada/Barbados tax treaty is a form of informal aid.
The original “Agreement Between Canada and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital” was signed on the twenty-second day of January, 1980, by the Conservative Government of Joe Clark.
That agreement was amended by the “Protocol Amending the Agreement Between Canada and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital” on 22 January 1980, by the Conservative Government of Stephen Harper.
I am not sure whether it was intended as aid to Barbados or to Corporate Canada.
Google “Canada/Barbados Tax Treaty” for details
But in any event, it is the GOB that sets the income tax rate to attract business to the offshore sector.
I guess US$4.5 million is better than the nothing it would get if Gildan went to some other low-tax jurisdiction.
Gildan gets a much better rate than the tax rate I will be paying when I get my Notice of Assessment from CRA in the next week or so.
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DD…informal aid for whom, the tax evaders certainly, the citizens of the island, definitely not at 1.5%….even Canada is getting robbed with such an arrangement…
I will tell you something, now that the Fort McMurray natural disaster is in full flight and causing the Canadian dollar to drop once again, I dont see Canada Revenue allowing these tax evasions to continue unabated….and, the Panama Leaks papers will ensure that companies can no longer get away with evading taxes on so massive a scale.
The writing is on the wall, it is beyond unfair, outright evil…I dont even want to imagine what the workers in those low paying jurisdictions are getting and under what conditions they work.
And as we know, the politicians on the island are not the brightest lot, when in 2016, they can still be talking about secrecy re public companies giving them campaign financing, they just dont want the electorate to know how much money they are pocketing.
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The Can/Bar Tax treaty was set up to help rich Canadians get richer. Barbados was a willing “participant”.
http://www.cbc.ca/news2/background/martin_paul/businessinterests.html
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Yep…it’s time to crack the whip on their asses, tax evaders, money launderers, etc….they will all fall.
So in that case, Gildan etc will either have to arrange with their government to pay taxes or pay enough taxes in Barbados or elsewhere,1.5% is crap, so that the island or elsewhere will be seen as low tax jurisdictions and not tax havens, which they are right now…who the hell agrees to something like that.
The bigger countries combined will definitely have to put an immediate end to that scam.
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Yeah, that Martin dude had some scam going in Barbados also , they are just a greedy lot, if he lives in Fort McMurray though, he too is on the run….wealth and greed dont matter when Mother Nature starts to rock….everyone hafta run.
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@Hants May 6, 2016 at 6:07 PM #
“The Can/Bar Tax treaty was set up to help rich Canadians get richer. Barbados was a willing “participant”.”
I do not disagree.
I find the following from the link to the 2006 story about Martin/CSL ironic
“Martin also came under fire from former Progressive Conservative leader Joe Clark, who charged that the former finance minister was in direct conflict of interest when he did not close Canadian tax loopholes for firms like CSL that do business in Barbados. Barbados is a tax haven for foreign companies where they can avoid paying their country’s taxes and wages. Some of CSL’s subsidiaries are registered in Barbados and pay almost no tax on their profits.”
It was during Clark’s short tenure as PM that the “Agreement Between Canada and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital” was signed on the twenty-second day of January, 1980.
So it was Clark’s government that signed on for the tax loopholes for firms like CSL that do business in Barbados.
The agreement was signed for Barbados by “Tom” Adams’ DLP Government.
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WW&C
GILDAN is not, or professes not to be evading income taxes.
By running its income and expenses through Gildan Activewear SLR, it is simply avoiding paying income tax in Canada, by paying income tax to Barbados based on interpretations of applicable tax laws, including income tax treaties between Canada and Barbados.
The following is from its 2015 Annual Report
“Factors or circumstances that could increase our effective income tax rate
The Company benefits from a low overall effective corporate tax rate as the majority of its profits are earned and the majority of its sales, marketing and manufacturing operations are carried out in low tax rate jurisdictions in Central America and the Caribbean Basin. The Company’s income tax filing positions and income tax provisions are based on interpretations of applicable tax laws, including income tax treaties between various countries in which the Company operates as well as underlying rules and regulations with respect to transfer pricing. These interpretations involve judgments and estimates and may be challenged through government taxation audits that the Company is regularly subject to. Although the Company believes its tax filing positions are sustainable, we cannot predict with certainty the outcome of any audit undertaken by taxation authorities in any jurisdictions in which we operate, and the final result may vary compared to the estimates and assumptions used by management in determining the Company’s consolidated income tax provision and in valuing its income tax assets and liabilities. Depending on the ultimate outcome of any such audit, there may be a material adverse impact on the Company’s financial condition, results of operations and cash flows. In addition, if the Company were to receive a tax reassessment by a taxation authority prior to the ultimate resolution of an audit, the Company could be required to submit an advance deposit on the amount reassessed.
The Company’s overall effective income tax rate may also be materially adversely affected by the following: changes to current domestic laws in the countries in which the Company operates; changes to the income tax treaties the Company currently relies on; an increase in income and withholding tax rates; changes to free trade and export processing zone rules in certain countries where the Company is currently not subject to income tax; changes to guidance regarding the interpretation and application of domestic laws, free trade and export processing zones and income tax treaties; increases in the proportion of the Company’s overall profits being earned in higher tax rate jurisdictions due to changes in the locations of the Company’s operations; and changes in the mix of profits between operating segments; or other factors. For example, the Organization for Economic Cooperation and Development (“OECD”), an international association of 34 countries, recently issued recommendations regarding international taxation, which if adopted by and between the tax authorities in the countries in which we operate could result in a material increase in the Company’s overall effective income tax rate.”
Reading between the lines, Gildan does not expect its low overall effective corporate tax rate to go on forever.
If/when Canada changes the treaty, Gildan will pack its bags and leave Barbados.
If Barbados increases the tax rate, Gildan will pack its bags and head for another low-tax jurisdiction – Bahamas, Cayman, etc. so the majority of its profits are earned and the majority of its sales, marketing and administrative operations are domiciled where they get the lowest tax rate.
Finally, I agree with your last paragraph.
Neither party wants the electorate to know how much money they are pocketing, either by way of campaign donations or other donations from “well wishers”.
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DD…what is becoming clear is that Gildan and others will ultimately pack their bags and head back to Canada seeing as the other tax havens, Cayman, Bahamas are all under scrutiny thanks to Panama Leaks and may very well have to adjust their tax laws upward re offshore companies to avoid the current designation and instead be labeled low tax jurisdiction.
Gildan is well aware that party, 1.5%….has to end.
I can tell ya now, Gildan and others do not want to pack their bags and move back to a 25% tax jurisdication, even 10% sounds better….but Caribbean politicians are not good negotiators, so they cant see this.
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And besides, seeing that these local politicians been getting free money for doing very little work for so many years and as necessity is the mother of invention.,.,, it would do them good to finally use their brains for a change to actually build the island back to what it used to be….now all of them are under scrutiny, it can only be for the better….it builds character.
Either that, or they will have a failed state for which both political parties can share blame.
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@ Well Well & Consequences May 6, 2016 at 8:18 PM,
The famous Panama Papers confirms what many of us have known for sometime: and that is politicians, the world over, are generally corrupt and that there flirtation with the wealthy elite has brought irreversible damage to the their respective countries. This incestuous relationship must be terminated forthwith.
We in Barbados should be looking at prosecuting all those stakeholders who have colluded in this scam. From our Prime Ministers, our business community, our elites, our legal professionals, et al.
We should not underestimate the evil that has emanated from tax avoidance. For us to state that this practice should be halted is not sufficient. We must hound and prosecute these bastards for the damage that they have done. We should lock them up and confiscate their wealth – irrespective of where it resides.
Understand me well: these criminals are the enemy from within. They must be severely dealt with if we pride ourselves as a progressive country.
http://www.independent.co.uk/news/world/politics/panama-papers-whistleblower-breaks-silence-to-explain-why-he-leaked-the-115m-files-a7017691.html
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Well said Exclaimer…the world leaders have been exposed as criminals hiding wealth and the little small island, fly by night politicians are more than happy to join with and emulate them, keeping vital information from the people and pocketing whatever free money they can, while the people are burdened with taxes and struggle to survive.
There are 7 billion people on earth, they have to make their force known to greedy politicians.
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@ Well Well & Consequences May 7, 2016 at 9:02 AM,
Take a look at how this scandal is being played out in Nigeria. A country that we dismiss at our own peril. The Nigerians have been vociferous in their condemnation of those countries who have played their role in perpetuating this scam. Contrast this with the silence emanating from within our Caribbean region. It speaks volumes and accurately reflects that our region has become a cesspit and a haven for the domestic and the foreign criminal.
http://www.theguardian.com/world/2016/may/05/nigeria-calls-on-anti-corruption-summit-to-back-registers-of-ownership
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Not only the silence emanating from the politicians in the Caribbean, but the fact that Adriel “Nitwit” Brathwsite was trying to influence the local media to do PR in the government’s favor when said governments are colluding with tax evaders and selling their countries for as little as 1.5% of what the tax evaders earn which easily equates to $ 1/2 billion bds or more annually….with just a little more push, they will sell the small island populations, right back into forced labor and mindbending slavery.
Panama Leaks papers will put an end to that scam.
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And what is vexatious to the spirit is these bitches for leaders would be telling the people about recessions which they themselves created by taking money out of circulation and hiding it in tax heavens for their own self-enrichment, while people suffer.
They should resume beheading for leaders, bring back the guillotine, the French and British had it right, pity they stopped..
……..
selling their countries for as little as 1.5% of what the tax evaders earn which easily equates to $ 1/2 billion bds or more annually……and the politians accept campaign contributions, which is personal pocket money to keep that theft and crookery of 1.5% tax in place for decades.
That is what useless politicians do.
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A top aide to former Nigerian President Goodluck Jonathan was arrested by the country’s anti-corruption agency on Monday.
Waripamowei Dudafa, who served as a special assistant on domestic matters to Jonathan, was picked up by agents of the Economic and Financial Crimes Commission (EFCC) at the Murtala Mohammed International Airport in Lagos, Nigeria’s Premium Times reported.
Dudafa was wanted by the EFCC for his alleged involvement in an arms scandal in which $2.1 billion of government funds earmarked for fighting Boko Haram was diverted by government officials.
Could this happen to Denis Lowe, Chris Sinckler or Michael Lashly
http://www.newsweek.com/nigeria-goodluck-jonathans-ex-aide-arrested-anti-corruption-agency-449506
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Even international scam artists are using Barbados’ name to try to scam others around the world, because they know the leaders on the island and their bribers are corrupt and slimy.
The president of Nigeria is right….Corruption Kills, Make the Connection.
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http://www.theguardian.com/world/2016/may/09/tax-havens-have-no-economic-justification-say-top-economists
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“Speaking on BBC Radio 4’s Today programme, Sachs said: “The UK and the US need to take the lead right now to end these tax secrecy havens. We see from the Panama Papers these are simply conduits for massive illegality, corruption, tax evasion and many other nefarious deeds. They just need to end.
“If the UK and US and the European Union as a whole decided on Thursday at the UK conference that enough is enough … there could be a phenomenal change in a very short period of time.”
Let’s hope these greedy large countries do the right thing, tax havens do disrupt economies and drives inequality. Besides, it’s time some island politicians start working for their salaries by actually using their brains, to develop the small economies.
Exclaimer. ..I am looking at the bright side, at least pressure is being applied directly.
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“To counter this, they are urging governments to agree new global rules requiring companies to publicly report taxable activities in every country in which they operate, and ensure all territories publicly disclose information about the real owners of companies and trusts. A concerted drive by the EU is now under way to require companies to declare where their profits are made, and to ensure tax is paid there rather than in the country in which it is declared.”
“Oxfam estimates that Africa loses about $14bn (£10bn) in tax revenues annually – enough money to pay for healthcare that could save 4 million children’s lives a year and employ enough teachers to get every African child into school.
Mark Goldring, chief executive of Oxfam GB, said: “It’s not good enough for information about company owners in UK-linked tax havens to be available only to HMRC – it needs to be fully public to ensure that governments and people around the world can claim the money they are owed and hold tax dodgers to account.”
“Corruption Kills, Make the Connection.”
Shut them down or make them pay 10% as opposed to 1.5%….again, no intelligent person would agree to such a scam, just goes to show how steeped in corruption governments have become, it took me days to get over what they agreed to and kept in place for over a decade with Gildan.
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A bit dated and off-topic, but interesting
http://www.theglobeandmail.com/report-on-business/financial-services-firms-should-be-force-for-good-rbc-chief-says/article29537700/
RBC faces tough questions over Panama connections
TIM KILADZE AND BERTRAND MAROTTE
TORONTO and MONTREAL — The Globe and Mail
Published Wednesday, Apr. 06, 2016 10:37AM EDT
Last updated Thursday, Apr. 07, 2016 6:41AM EDT
Two days after an unprecedented leak linked some of the world’s largest lenders to alleged tax evasion and money laundering, Royal Bank of Canada went on the defensive over its ties to a Panama-based law firm used to set up offshore tax havens.
The leaked documents, now known as the Panama Papers, stole the show at RBC’s annual meeting in Montreal on Wednesday. Chief executive officer Dave McKay faced a chorus of questions about the bank’s relationship with law firm Mossack Fonseca, through which the bank allegedly registered 378 shell companies.
“You have to operate within the laws and regulations of a country. And you have to comply with them. We take that very seriously,” Mr. McKay said. RBC repeatedly stressed there is a difference between tax planning – a category that includes products such as tax-deductible RRSPs – and illegal tax avoidance. Mr. McKay also said the bank has a special team going through the data related to the bank’s use of Mossack Fonseca.
For years, RBC pursued a growth strategy that pushed heavily into the Caribbean and Latin America.
The bank’s wealth management platform also targets high-net-worth customers, who are the primary users of tax planning services. Its $5.4-billion (U.S.) acquisition of City National last year was designed to serve rich clients. At the same time, governments and regulators have increased their scrutiny of tax-avoidance schemes.
The intensifying scrutiny has frustrated RBC executives for more than a year, according to multiple sources. Before the Panama Papers were leaked, France’s tax-evasion watchdog had alleged RBC’s Bahamian subsidiary participated in tax fraud and money laundering activities involving billionaire international art dealer Guy Wildenstein.
RBC has never been proven guilty of any wrongdoing. In the French case, the leading prosecutor has repeatedly delayed the process and RBC has consistently denied participating in any illegal activities.
RBC also prides itself on having avoided global scandals such as the rigging of the London interbank offer rate (Libor) and the sale of fraudulent mortgage securities, both of which resulted in multibillion-dollar settlements against several global banks. “We’re very proud of our culture,” Mr. McKay said. “We believe in doing the right thing.”
Of Canada’s banks, though, RBC typically draws the most attention, given its standing as the country’s biggest company. Yet rivals have faced similar woes.
Canadian Imperial Bank of Commerce also operates in the Caribbean, and three years ago the bank discovered it had potential problems within its regional wealth management operation, according to sources. To clamp down, CIBC separated its clients into two buckets: those who had a legitimate reason for a Caribbean bank account (such as to support local relatives or to buy a vacation home) and those who had not. Anyone without an obvious reason was asked to provide documentation of tax compliance – which upset many clients. Those who refused had their accounts frozen, and some were eventually dropped.
After the three-year review, as much as one-third of CIBC’s Caribbean wealth assets under management were removed, according to someone familiar with the exercise. CIBC disputes that figure and says some accounts may have been closed simply as a preventive measure.
Other Canadian banks have paid large fines. Between 2013 and 2015, Toronto-Dominion Bank paid $72.5-million to settle lawsuits stemming from an alleged Ponzi scheme it failed to spot in one of its Florida branches.
The frustration felt by RBC and its rivals is largely rooted in the banks’ efforts to clamp down on clients’ bad behaviour in the past few years. People in the industry say HSBC PLC’s $1.9-billion penalty in 2012 over being used to launder Mexican drug cartel money sent ripples through the industry.
The fallout has led to a push by global banks to build up anti-money-laundering (AML) teams. From 2013 to 2014, British banks created more than 2,150 anti-money-laundering jobs, a rise of more than 50 per cent from the previous year. At RBC, the AML group founded in 2001 had three people; by the end of 2016, it is expected to employ between 750 and 800 people, or more than half of its global compliance head count.
“It is true they have lots of people; it is true they spend lots of money,” Christine Duhaime, a Canadian lawyer who specializes in anti-money-laundering rules, said of Canadian banks. The problem: “The level of sophistication and knowledge is a lot lower than anywhere else in the [developed] banking world.”
AML specialists also admit that things can slip through the cracks. “Even for a bank that is really determined to be ethical, it is really difficult,” said Roy Cullen, a former parliamentary secretary who helped set up Canada’s anti-money-laundering regime. He also serves as the Canadian representative to GOPAC, the Global Organization of Parliamentarians Against Corruption.
The corruption scandal ensnaring FIFA, soccer’s global governing body, illustrates the extent to which good intentions can backfire. When the scandal broke last year, the U.S. Justice Department revealed that some FIFA officials used CIBC FirstCaribbean International Bank accounts to move money. In one instance, relating to a $600,000 wire transfer in 2003, CIBC did its best to document the source of funds by asking for a paper track record. It was later alleged that FIFA executive Chuck Blazer and unnamed co-conspirators created a backdated consulting agreement with a Panamanian company to cover it up.
In response to such difficulties, many banks have been cutting ties altogether. National Bank of Canada pulled out of the Caribbean in 2007 by selling its Bahamian subsidiary. “If you’re doing the due diligence you’re supposed to on each case, it’s not scalable,” said someone familiar with the decision.
The standards for verification are now so high that it takes armies of people to research potential clients and payments – which eats into profit margins.
RBC recently followed a similar route. Shortly after Mr. McKay became CEO in 2014, the bank started closing its Latin American and Caribbean wealth operations, and recently sold its Swiss private banking subsidiary. Sources say there were two key reasons for the moves: The bank lacked scale to expand in Latin American countries such as Chile and Brazil, and it also worried about reputational risks in the Caribbean.
The way the system is designed, the buck stops with the banks, Ms. Duhaime said. “Whether they like it or not, they are the police force.”
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It’s getting hot in here!!!!!
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“The secrecy specialists behind Panama Papers’ Canadian offshore dealings”
https://www.thestar.com/news/world/2016/05/09/the-secrecy-specialists-behind-panama-papers-canadian-offshore-dealings.html
“A sprawling industry of tax avoidance professionals — lawyers, financial planners, bankers and accountants — make a living advising the rich how and where to find places to lighten, or even eliminate, their tax responsibilities in Canada…………………..”
Interesting no mention of Barbados in most of these Panama Papers stories.
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Chronic thieves and backstabbers.
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Just to reiterate, tax ‘avoidance’ is legal, tax ‘evasion’ is not.
Before jumping to refer to prosecution, understand the issues.
Change legislation if need be, but to scream for prosecution for what is not a criminal matter is…. criminal.
Ha.
”Interesting no mention of Barbados in most of these Panama Papers stories.”
Largely because Barbados is, contrary to lip-licking talk, adhering to its international tax treaties.
Do, I sound harsh? Probably, because one must be careful to not run rampant with conclusions, without assessing properly first.
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Crusoe…there is an ongoing international investigation,,,,, not a Barbados investigation, which we all know will be useless anyway.
Based on glaring criminality staring the investigators who did the initial investigation in the face last month, an international CRIMINAL investigation was launched mere days later…capeche..had there not been proof of criminality, there would be no criminal investigation.
Now the ongoing investigation, because there are so many companies and individuals involved, will reveal who is evading taxes and who is NOT, until such time as it is proven that some companies are NOT evading taxes, but using a low tax jurisdication, they are ALL under suspicion, because it’s an international investigation, otherwise, what’s the point.
All of them cannot be saints since proof of criminality was found last month, as I said previously, those companies who may be found to not have done nothing wrong, should welcome the international investigations.
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“Just to reiterate, tax ‘avoidance’ is legal, tax ‘evasion’ is not.”
And all these revelation will revolve around just that.
Unfortunately the mere mention of your name if you are a senior government official or politician will convict you. The public will execute their verdict and off to ‘jail’ you go.
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Just dont get your name mentioned…aren’t politicians supposed to be above reproach.
What am I saying…ya talking about US, Canada, etc right..you could never mean Barbados.
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Pressure is building in Canada, to crack down on tax avoidance schemes.
Tax loopholes cost Canada billions in lost revenue. Canada used agreements meant to crack down on tax evasion to open up corporate tax loopholes
https://www.thestar.com/news/world/2016/06/17/offshore-tax-avoidance-fixing-it-made-it-worse.html
“Gildan
The popular T-shirt and sports apparel manufacturer has declared more than $1.3 billion (U.S.) in income over the last five years but has paid only $37.9 million in tax, according to its corporate annual reports. That is the equivalent of a 2.8 per cent annual tax rate.
By its own reckoning, the company achieves this incredibly low tax rate almost entirely due to the “effect of different tax rates on earnings of foreign subsidiaries,” which reduced its tax bill by more than $384 million over that period.
Gildan operated out of Montreal for years, but in the late 1990s it came under intense pressure to cut costs in order to compete with cheap imports, said vice-president Peter Iliopoulos in an interview. The company moved its manufacturing to Honduras, where labour is cheaper, and its business headquarters to Barbados, where the corporate tax rate is 1.5 per cent.
“A company like Gildan that wanted to remain in the industry and maintain profitable margins — where it can drive its long-term growth strategy (was) essentially required to move their operations to countries where production costs were lower,” Iliopoulos said.
While Gildan maintains its corporate headquarters in Montreal, it says all day-to-day business decisions are made at its office in Bridgetown, Barbados, which employs 200 people out of a global workforce of 42,000.
“As part of that overall strategy for the company, we were looking at taking advantage of trade preference programs and trade agreements that were in place,” said Iliopoulos. “Canada has a long-standing income tax treaty with Barbados. . . The Canadian government has decided to have their foreign affiliate system function in order to provide Canadian multinationals with the best ability to compete on an international and global scale.”
It’s not clear that any of the tax Gildan does pay — $4.9 million last year — goes to Canada. The company wouldn’t provide a breakdown of where its tax is paid.”
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