The Ministry of International Business is doing what is necessary to ensure that Barbados has a more transparent tax environment.
This assurance was given today by Minister of International Business and Industry, Ronald Toppin, as he delivered the feature address at the 15th Annual Institute of Chartered Accountants of Barbados International Business Workshop, at the Barbados Hilton Resort, Needhams Point, St. Michael.
Minister Toppin stated that his Ministry is “charged with the task of introducing the relevant legislative and administrative framework to ensure that there is a transparent mechanism to implement compliance and provide an effective enforcement mechanism if the substantial activities requirements are not met.
“We must also be in a position to enable the conduct of exchange of information in cases of non-compliance and high-risk cases,” he added.
Mr. Toppin said that on January 1, 2019, the Barbados Companies (Economic Substance) Act 2018-41 was introduced, and became effective. It recommends that companies involved in geographically mobile activities, such as banking business, insurance, fund management, finance and leasing and headquarters, must have their business activities controlled, directed and managed from Barbados. They must also have an adequate number of employees, expenditure and physical assets relating to that activity and its core income-generating activities have to be conducted in Barbados.
The International Business Minister noted the legislative changes which took place during the last year, which included the repeal of the International Business Companies Act, the International Financial Services Act, the Exempt Insurance Act and the International Trust Act; the removal of all provisions related to International Societies with Restricted Liabilities from the Societies with Restricted Liabilities Act, and the deletion of Section 12H and other relevant provisions of the Income Tax Act.
Minister Toppin also mentioned that “Prime Minister Mia Amor Mottley and the Government of Barbados decided to take the bold and unprecedented move to revamp the corporate tax structure, and subsequently, restructure the personal income tax regime as well”. He said an adjustment was made to Barbados’ corporate tax structure, which resulted in the convergence downward of corporate tax rates.
“This decision has led to the equating of the tax rates for entities operating in what we referred to as the domestic space and the international business sector. All entities, with the exception of those in the insurance regime, now fall under one corporate tax regime, with taxable income subject to rates of between 1 and 5.5 per cent,” Mr. Toppin stated.
Speaking about the future of international business, he noted that Barbados now has one sector – a domestic business sector with a global flavour and global reach – and would seek to make the necessary improvements to facilitate the seamless operation of business, as well as refocus efforts on reinvigorating and diversifying Barbados’ offering of weightless services and building a cadre of world-class professionals, second to none. In order to do this, the minister said “his ministry will continue to educate all stakeholders relative to the new legislation, systems and processes”.
Barbados is a member of the Organisation for Economic Cooperation and Development’s Inclusive Framework on Base Erosion and Profit Shifting, and as a member, collaborates on equal footing with other members in tackling the issues of tax avoidance, improving the coherence of international tax rules and ensuring a more transparent tax environment.