Blacklisting of Barbados by the European Union (EU) could have serious implications for our economy.
International Business Minister, Donville Inniss made this emphatic statement on Wednesday at a press conference convened at Baobab Tower, Warrens, St. Michael, to address the actions/decisions of the EU in Brussels on December 5, that saw the country listed among non-cooperative jurisdictions for tax purposes.
While noting that the EU’s decision could impact negatively and have the effect of international institutions refusing to conduct business in this jurisdiction or experiencing increased cost when trading with our country, he assured the media, Government would be fighting to get the country delisted as soon as possible.
“When multinational groupings, as particularly as powerful as the EU is, issue these kinds of lists and reports, they are picked up by other groupings and organisational bodies, including financial institutions, who may then decide that the cost of doing business or financing projects in jurisdictions like ours then has to be increased. Or, they may very well go the full gamut of saying that we restrict doing business in domiciles such as Barbados.
“We are very determined to ensure that Barbados is removed from that list of uncooperative jurisdictions,” said Minister Inniss, who had earlier stated that the EU had indicated they would, in the future, be penalties and “we would certainly have to wait to see what these would be”.
The International Business Minister further acknowledged that Government was surprised by the report that placed Barbados and three other Caribbean countries on the list. In the report of the General Secretariat of the Council of the EU titled The EU List of Non-Cooperative Jurisdictions for Tax Purposes, it is stated that: “Barbados has a harmful preferential tax regime and did not clearly commit to amending or abolishing it as requested by 31 December 2018. Barbados’ commitment to amend or abolish other harmful tax regimes in line with criterion 2.1 will be monitored.”
The particular tax regime was noted as the Fiscal Incentives Act Regime. A search of Invest Barbados’ website states that this Fiscal Incentives Act provided various tax and customs duty exemptions to corporations involved in manufacturing activities which qualified for concessions.
While the EU report stated that this listing was given on the basis of responses received by December 4, 2017, Mr. Inniss stressed that on December 1, Government had already responded to the EU, indicating it had taken a policy decision to abolish the Fiscal Incentives regime by September 2018, three months ahead of the December 2018 deadline.
Emphasising that the Fiscal Incentives Act was not the only or main issue of discussion, he noted it was the last point on which the EU sought further explanation and particularly “as to how it was applied”. He therefore stressed what was more important to note was the country’s commitment to the World Trade Organization (WTO) to abolishing that particular set of incentives and working towards replacement incentives that would “certainly be WTO compliant”.
To read the full statement from Minister of Industry, International Business, Commerce and Small Business Development, Donville Inniss, on the European Union list of non-cooperative jurisdictions in taxation, you may click here.