ICAB backs government in OECD fight
Tuesday February 15 2011 | 05:00 AM

“The Institute of Chartered Accountants of Barbados (ICAB) will support recently announced Government initiatives to respond to challenges presented by a recent OECD/Global Forum report, which cites Barbados as falling short of current standards on tax transparency and information exchange.”

Reginald Farley, ICAB’s Executive Director, further stated that “this and other challenges to the vital international business sector need to be addressed urgently by Government and the private sector, through legislative, diplomatic and public relations channels”.

The Government announced that it would be amending the Income Tax Act to expand the scope of the tax information exchange provisions in our existing double taxation treaties to meet the current OECD standard on the exchange of information for tax purposes, as well as enable Barbados to exchange tax information with countries with whom it has initialled or signed a new treaty or protocol, but the treaty has not yet been ratified by the other country.

Mr. Farley noted, “Barbados has always made a clear commitment to tax transparency and exchange of information, even at a time when competitors were thriving on secrecy provisions in their domestic laws. By contrast, this country has always pushed to develop double taxation treaties (DTAs) (of which there are 20, plus the CARICOM DTA), which include tax information exchange agreements as an integral element.

“We have concentrated on providing high quality professional services to international companies within treaty networks. It is, therefore, most disingenuous for the OECD and the Global Forum to label Barbados as a country lacking in transparency and unwilling to exchange information. What has happened in this case, is that some of our tax information exchange agreements pre-date the current standards and the more recent ones are awaiting ratification by other countries.”

The ICAB Executive Director also raised concern about the actions of the UK Government through the Finance Act 2010, where the penalty for non-compliance with certain aspects of UK income tax law (e.g. UK taxpayers’ undeclared or under-reported income tax or capital gains) will be determined based on the foreign country involved. The UK appears to have based the categories on the OECD/Global Forum pronouncements. ICAB is concerned that notwithstanding the fact that Barbados has since 1970 had a DTA including tax information exchange with the UK, Barbados has been placed in the category for the most severe treatment.

Mr. Farley was of the view that this should serve as a wake-up call and a reminder that the OECD countries will continue to apply pressure to international financial centres.

He concluded, “As a nation, we need to work as a cohesive unit in addressing these challenges to our economic well-being. ICAB will give solid support to the efforts led by Government and the international business sector in protecting Barbados’ reputation as a well-run international financial centre and a good place to do business.”