Prime Minister Mia Mottley delivered a ministerial statement last Tuesday to amend the local tax structure in the context of constant changes from the international environment to avoid resultant pressures. The nature of the local economy means government has to be compliant with tax and related legislation to avoid being blacklisted by the capitalist north.
The following is a query received from BU family member John A about the new tax system to take effect from January 2024.
With Section 2 4 and 5 payment of corporation tax monthly should prove a challenge. Some companies may make money for 4 months of the year then lose for 8 months in the tourism sector for example. That’s why corporation tax is based on 12 months of business.
Many retail businesses see December recording the highest sales and revenue of the year. It is also the last month of the year. If for example 50% of profit generated comes from December sales, where is cash flow going to come from to pay 1/12th of this in each month for the Q1 of the same year with cash flow already stretched covering normal operational expenses in your lowest revenue period?
There is also the question of whether global reforms could disadvantage Canadian-based multinationals, which have increasingly looking to offshore jurisdictions, most notably Barbados, as conduits to invest overseas. More than $60-billion flows through or is kept in Barbados, where the corporate income tax rate is 2.5 per cent. While some of that is private wealth being stowed offshore, much of the money is being used by Canadian companies doing business in other countries around the world – Global watchdogs take on the corporate tax dodgers
There was a time when tax treaties with little islands like Barbados gave the opportunity to foreign companies (captive insurance) to exploit tax structures to secure profit. In a post OECD active world, developing countries including Barbados, have had to withstand the piercing glare of the most powerful countries in the world. In is instructive this weekend finance ministers from the world’s 20 largest economies have gathered in Australia AND the main agenda item if you are curious? “ To to squeeze billions of dollars more in taxes from the world’s largest companies … to plug the gaping loopholes in the international tax system that allow multinationals to slide substantial profits into tax havens or low-tax countries, depriving governments of badly-needed revenue”.
It is an open secret the opinion OECD counties hold for countries like Barbados who use double taxation treaties to lure multinationals from developed countries. Minister Donville Inniss, as is his wont, has voiced his displeasure at the OECD moving the ‘goal post’. The world’s powerful countries are intent on blocking flight of capital from their jurisdictions and Inniss can continue to utter his usual high level of political rhetoric, there is not one iota he can do about it.
George Pilgrim, General Secretary, Democratic Labour Party
As a research student on Caribbean Political Economy I regularly surf the net looking for relevant readings and presentations. I recently came across an address titled “The Global Economic Crisis: the Role of the International Financial Institutions in the Caribbean” delivered in the Bahamas. After reading the above text of the address, and reading a recent local presentation I feel compelled to share both perspectives with my fellow Barbadians.
In the Bahamas address the author in a very wide ranging assessment delivered his verdict on the current economic challenges facing the Caribbean region. The author sets the tone for his address by identifying a trilogy of issues that combined to exert pressure on the economies of the region. He advanced that while dealing with the adverse effect of the global and financial crisis, most of the region’s economies have also had to contend with three other sets of economic forces which have imposed on them the obligation to carry out major transformations to their economic structure at great costs, or to make major adjustments that have significantly narrowed the policy space within which they operate. The author identifies these as:
Loss of trade preferences, which lead to a deterioration of fiscal circumstances, a substantial reduction in their foreign exchange earning capabilities, and the lost of in excess of 60,000 jobs in the OECS; Secondly, the impact of the fuel and food crises in 2007 and 2008; Thirdly the fact that the region had some counties where their debt had exceeded100% of their GDP.
The recent catastrophic earthquake which rocked Haiti has exposed one of the weaknesses of modern civilization; the failure to narrow the gap between rich and poor countries. Haiti is a country which has languished at the bottom of the ladder using any yardstick which measures economic and human development. During the period of struggle being experienced by Haiti its regional and international counterparts have failed to advance its economic and other infrastructural development.
Yesterday in the news reference was made to the richer nations (G8) failing to honour pledges made at the 2005 Gleneagles Summit recorded in the Gleneagles Agreement. Total aid pledged was $107bn (£68bn) in 2010 against 2005 pledged of $128bn, the Organisation for Economic Co-operation and Development has forecast. A recent study released by the OECD has tabulated the shortfall in pledges at 21 billion dollars. Countries expected to be most affected by the shortfall are those located on the African continent. As much as we hate to write it Blacks and non-Whites represent the bulk of the population of Africa.
Is it unreasonable to link the economic stagnation which exist in the world to race?
Coming out of the G20 summit in London this week Barbados would have derived great satisfaction when the OECD published late last night (02 April 2009) its revised Tax Haven List. The List is divided into four categories:
I would now like to talk a bit about CSME.. although it is not the central theme here….
The issue is really whether CSME will work for Barbados when fully implemented. Right now it is partially implemented with certain categories like graduates, musicians artists etc. Artisans and unskilled persons still have to get work permits. The aim of CSME is to ensure that all facets of the agreement are in place by 2015.
The main reality of CSME is that there is free movement of capital and people between the members of Caricom. The strong business people in the region want the free capital movement for investment. they also want the expanded markets with special benefits re duties and other trade controls (e.g. C.E.S).Therefore CSME means effectively one economy with a strong central control, but with individual countries having some control in local decision making. It may not mean one currency like in the eight OECS countries, but like the UK and the EU, there may be different currencies as we have now.