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.
Lee Fang
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