More Chinese funds for Barbados
Barbados can expect more loans from the People’s Republic of China under preferential terms to fund a number of infrastructure and development projects, including expansion of the Grantley Adams International Airport (GAIA). Ambassador Extraordinary and Plenipotentiary of the People’s Republic of China to Barbados Wang Ke disclosed that Beijing was prepared to offer “large scale preferential” loans to Barbados for a wide range of projects as a show of confidence in the country. Government today signed a preferential loan agreement with the Export-import Bank (Exim Bank) of China which will fund the Sam Lord’s Castle redevelopment project. The agreement, which comes after about 18 months of negotiation, will see the disbursement of US$170 million for the construction of a Wyndham Hotel and reconstruction of the Castle on the old Sam Lord’s Castle site in St Philip. Ke said the St Philip project was the “very first of its kind” large scale infrastructure project in Barbados for which China was offering funding under preferential terms. “This makes China the only country that offers large scale preferential loan to finance infrastructure projects in Barbados, which not only shows that China remains confident in Barbados’ tourism industry and its national economy, but also write a new chapter in China-Barbados partnership of neutral benefit and win-win corporation,” said the Chinese diplomat. “I would like to mention that besides Sam Lord’s Castle hotel, China and Barbados are negotiating several other projects to be funded by China preferential loans such as the reconstruction and expansion of the Grantley Adams International Airport and Pier-head Marina project in Bridgetown.” She said the loan agreement would not only promote bilateral corporation but would also bring “new vitality into partnership of comprehensive coorporation” between China and Latin American and Caribbean countries. “I hope the two sides, taking Sam Lords Castle hotel project as an example, could push for negotiations of further corporation and continuously gain new achievements so as to bring more and greater benefits to our two countries and peoples,” she added. Ground breaking for the Sam Lord’s Castle project is expected to take place on Monday, followed by the construction of the multi- million dollar international brand name hotel led by the China National Complete Plant Import and Export Corporation Group. “I expect and believe that the construction and future operation of the Sam Lords Castle hotel will play a positive role in further advancing the contribution that tourism makes to Barbados national economy. Meanwhile the Sam Lord’s Castle hotel will lay a solid foundation and set up a pilot project as well for more capable Chinese enterprises that are about to participate in Barbados infrastructure projects,” said Ke. Pointing out other areas of “Chinese participation” in the development of Barbados, including the Garfield Sobers Sports Complex, Prime Minister Freundel Stuart said the signing marked another phase of the relationship between the two countries. And he expressed confidence that the redevelopment of the Sam Lord’s Castle and the construction of the Wyndham hotel would benefit the island’s tourism product tremendously. “May we hope this is the first of a series of new developmental initiatives to further define and enrich the relationship between Barbados and the People’s Republic of China,” said Stuart. “It [the hotel] has been targeted to cater to couples as well as to have a special appeal to families as this group usually travels in the summer. This in itself will significantly help our tourism product in the slower summer months as Barbados is striving to become a true year round destination and not just a winter destination as it is traditionally known.”
St Lucia signs FATCA agreement with US Government
On November 19, the government of St Lucia signed an agreement with the Government of the United States of America to implement the US Foreign Account Tax Compliance Act (FATCA), reports the St Lucia News Online. Enacted by the US Congress in 2010, FATCA targets non-compliance by US taxpayers using foreign accounts. FATCA requires foreign financial institutions to report to the Internal Revenue Service information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest. This kind of information exchange is a top priority for the United States as access to information from international financial institutions is critically important to the full and fair enforcement of US laws. US Ambassador to Barbados, the Eastern Caribbean, and the Organization of Eastern Caribbean States (OECS), Larry Palmer commented, “Every year, tax evasion deprives governments of all sizes of much-needed resources to fund public services and investments. The United States welcomes St Lucia’s commitment to enhancing global financial transparency by improving international tax compliance. Today’s signing marks a significant development in our nations’ collaborative efforts to combat offshore tax evasion — an objective that mutually benefits our two countries. FATCA is yet one more example of the deep and substantial ways in which the economies of St Lucia and the United States are linked.”
Crackdown on Caribbean IFCs a surprise boon for Hong Kong
Hong Kong is tipped to become the world’s largest offshore corporate services centre by 2020, helped ironically, by the industry’s own struggles against reform demands coming from western governments and pressure groups, reports the South China Morning Post. On notice after high profile money laundering and tax avoidance scandals, traditional offshore havens like the British Virgin Islands and Bermuda face being squeezed by government action groups now coordinating new guidelines on transparency and tighter regulation. Industry leaders say they need to rally in support of the sector. “It is clear…that the push for regulation – the push to squelch the ambitions of offshore – will remain both ambitious and exigent…Proving the worth of offshore could weaken the regulatory urge,” Jonathan Clifton, managing director of incorporation giant OIL, a division of Vistra Group, now argues. For Hong Kong this renewed assault may actually work in the city’s favour. The city’s common law system and relatively hassle free bureaucracy has long helped make it a key global player in the still fast growing market for incorporation, trust, and fund services, among others, with investors keen to take advantage of the city’s role as a bridgehead between China and the world. This market has in turn supported a local ecosystem of lawyers, accountants and advisers. Helped by a forecast five-year 72 per cent explosion in Greater China demand for such services, by the end of the decade Hong Kong will be the world’s largest offshore market, OIL analysts predict, overtaking the British Virgin Islands, Cayman Islands, and Singapore. Some industry experts now call Hong Kong ‘midshore’, which contrary to widespread concerns the city is a conduit for dirty mainland money, suggests a more rigorous regulatory approach to corporate oversight compared to other jurisdictions. “The outlook for Hong Kong is very positive. It is ‘super jurisdiction’. Both an originating market (from cross border money flows) and a destinational jurisdiction,” Clifton said. Tighter banking rules globally are making it harder for offshore companies in island tax havens, and especially offshore trusts where beneficiaries are sometimes hidden, to even open a bank account; a first step to doing business or making an investment. “The boom times are probably over (for the BVI and Cayman Islands). They have to present a value proposition for why people should use those company (structures),” said John Barclay, managing director of Primasia Corporate Services. A broader threat to the sector comes from the Common Reporting Standard, an initiative by the rich nation backed Organisation for Economic Cooperation and Development to freely share, upon official request, information on individuals and companies as part of a general tax evasion and money laundering clampdown. Countries that don’t comply could be blacklisted by the OECD making it harder for companies and trusts registered there to bank globally. Though still in consultation phase, “it would be a downward spiral for any country to say we are not going into it,” believes Tim Prudhoe, a BVI based barrister at Kobre & Kim. A separate UK led effort to strong arm crown dependencies like the Cayman Islands and BVI – where it is close to impossible to know who or what stands behind secretive offshore structures – to disclose “people of significant control” kicked off in April with a change in English companies law making such disclosures mandatory in England and Wales. In response the BVI government is already debating how it can share information with the UK, Prudhoe said. “If it becomes clear people can find out about your financial status anyway, one reason people use the BVI may reduce over time,” he said. “They then might as well have money closer to home,” like to Hong Kong. The OECD is also looking at ways member countries can tighten up transfer pricing, another area where offshore jurisdictions, most notably Luxembourg, have excelled. Also known as base erosion and profit shifting, multinationals like Amazon and Facebook use legitimate gaps in the tax code to book profits offshore meaning they pay little or no tax in countries where the revenue originated. The mooted changes are only in an early consultation phase, but if they are successfully implemented by OECD member countries, Hong Kong could again be a beneficiary as its 16.5 per cent flat corporation tax rate, while higher than some offshore centres, is still low on a regional basis.