Financial Institutions Put New Limits on Foreign Exchange in Trinidad and Tobago
At the height of a foreign currency crunch in Trinidad and Tobago, two financial institutions have announced new limits on foreign exchange to the public. The T&T Unit Trust Corporation (UTC) has implemented disbursement limits on its TT-dollar Income Fund Visa Electron card. In a statement, the UTC said there was “limited access” to foreign exchange in the external environment it operates in and, therefore, “the UTC has taken a decision to introduce daily and monthly limits on the international usage of the TT-dollar Income fund Visa Electron card.” UTC said daily and monthly limits on the international usage of the TT-dollar Income Fund Visa Electron Card include for “daily international ATM transactions-TT$1,000 (approximately US$147 which fluctuates based on daily rate.) Daily international Point of Sale transactions-TT$5,000 (approximately US$735 which fluctuates based on daily rate. Monthly limit of TT$20,000 (approximately US$2,940 which fluctuates based on daily rate).” JMMB Bank has also followed suit, citing what it called a “precipitous” decline in the availability of US dollars in T&T. Not only did JMMB cap transactions concerning purchases or withdrawals outside of T&T with not only US currency, but all currency types. The bank told customers that “the drastic reduction in the supply of foreign exchange has impacted, and will continue to impact our ability to facilitate your online purchases from international vendors, overseas withdrawals at ATMs, and international Point of Sale (POS) purchases. “As a result, a foreign currency limit equivalent to TT$3,500 per month will be effective from October 29, 2017 for all foreign currency online transactions including wire transfers and international point of sale purchases.” It added that customers would not be able to access foreign currency cash via ATMs but their TT-dollar limits would not be impacted. Article compliments Caribbean 360.com
Cayman still labelled as ‘notorious tax haven’
Despite the efforts of Cayman Islands’ finance industry, with government and its lobbyists spending time and money trying to paint a picture of how it fits into the global economy and its high standard of regulation, another report on tax issues relating to US-based global corporations has painted Cayman as a notorious tax haven. Offshore Shell Games 2017, a report by the US PIRG and the Institute on Taxation and Economic Policy, outlined the extent to which Fortune 500 companies are using offshore financial centres and as a result legitimately avoiding taxes in the US on trillions of dollars of profit. Responding to the article, Cayman Finance CEO Jude Scott repeated his message that Cayman is committed to global transparency and is a strong international partner. “Reports such as this conveniently overlook how international finance centres (IFCs) like the Cayman Islands use their commitment to global standards for transparency and cross-border information sharing with law enforcement and tax authorities. Unfortunately, every jurisdiction is at risk from those who will attempt to get around the systematic safeguards, but the laws and regulations adopted by the Cayman Islands make us a strong international partner to address these concerns no matter where they originate,” he said. Explaining Cayman’s role, Scott said it was a global financial hub “connecting law abiding users and providers of investment capital and financing around the world”, which provides value for the US, UK and other major economies because it pools capital and financing for things like infrastructure development. “Cayman is a transparent jurisdiction due to our combination of a verified beneficial ownership regime, the adoption of more than twenty global financial standards and adherence to both US FATCA and the EU’s Common Reporting Standards,” Scott said. “Cayman also is participating in the OECD’s BEPS initiative and will be introducing Country-by-Country Reporting by December 2017. We meet none of the descriptions used by entities such as the OECD or Transparency International to define a tax haven. In fact, our system purposefully lacks any laws or regulations like double taxation treaties or foreign incentives that support the shifting of tax base by foreign entities to avoid corporate taxes in their home jurisdictions,” he added. The latest report focuses on the extent that Fortune 500 companies use offshore centres and what that means for tax collection on corporate profit. In the report the authors point to companies that don’t have an office in Cayman holding billions of dollars here. Ugland House, the headquarters of Cayman’s largest law firm, Maples and Calder, is again singled out in the report as a “notable symbol of these excesses”. It is described as a modest five-storey office building which is the registered address for 18,857 companies. “Simply by registering subsidiary companies in the Cayman Islands, US companies can use legal accounting gimmicks to make much of their US-earned profits appear to be earned in the Caymans and thus pay no taxes on those profits,” the report stated. Article compliments IFC Review.
St Kitts-Nevis says it will not engage in a race to the bottom
After implementing a drastic 50 percent reduction in its required donation for economic citizenship last month, which prompted Antigua and Barbuda to go even lower, the Citizenship by Investment Unit (CIU) – and by extension the government of St Kitts and Nevis – now says it “remains resolute in protecting the high standards associated with the federation’s citizenship by investment (CBI) programme” and “will not engage in a race to the bottom,” reports Caribbean News Now. The St Kitts and Nevis’ CBI programme presently has three distinct citizenship options: the real estate product priced at US$400,000, the Sugar Industry Diversification Foundation (SIDF) option at US$250,000, and the recently introduced Hurricane Relief Fund (HRF) option where investors can make a non-refundable contribution of US$150,000. The Hurricane Relief Fund option, which was introduced last month, will be available for a period of six months, although St Kitts and Nevis has never satisfactorily explained who they expect to make a donation of $250,000 when the same benefit is available at $150,000. Chief executive officer of the CIU, Les Khan, stated that there is a consensus among international marketing agents that there has been “consistent excellence and professionalism associated with the platinum brand of the St. Kitts and Nevis Citizenship programme: the oldest and best programme in the Caribbean.” During a recent trip to the Middle East, Khan reassured agents that St Kitts and Nevis has not engaged and “will not engage in a race to the bottom.” Khan explained, “We originally set a price that we felt was competitive, but was also one that maintained the standard of a platinum brand and one that was still higher than everyone else’s. There will be further adjustments, I believe, by other countries but we will not be engaged in that race to the bottom.” This point was also articulated by St Kitts and Nevis prime minister, Dr Timothy Harris, when he addressed members of the media during a press conference held last Wednesday. Harris noted that his administration will always seek to maintain the platinum standard of its CBI programme and claimed that St Kitts and Nevis has not reduced the price of any of its CBI products, but instead is now offering a third option in the form of the HRF – an apparent distinction without a difference. “Having regard to the reality of the hurricanes, we had to address that via a new offering. We are not giving undue consideration to what has happened in Antigua or in any other country. We remain focused on promoting and marketing our programme as the one which the discerning investor would want to pay attention to, and we would want to invite those investors who are looking for an enduring relationship with our country and not just for the mere acquisition of citizenship,” Harris said. The prime minister added, “We do not have an OPEC-like arrangement where countries participating in the citizenship programme come together and determine the price, and so each country, each jurisdiction at its sovereign wish, would make those judgment calls, and we respect that and we will let the market play out in terms of its responses to these issues.” Khan earlier reported an increase in the level of interest in all three CBI offerings of St Kitts and Nevis, as well as the signing on of five additional international marketing agents to promote the federation’s CBI programme. Opposition leader Dr Denzil Douglas has claimed that the new citizenship option is “a watered down CBI initiative that has not been ratified by Parliament”. He said in statement that “it raises legitimate serious questions as to the validity of the citizenship and the passport that will be derived from it”. While Khan recently highlighted a number of different steps in the due diligence process conducted by the CIU, he made no reference to the ongoing difficulties that may be experienced by holders of St Kitts and Nevis passports in conducting financial transactions in the US as a result of a still extant US Treasury’s Financial Crimes Enforcement Network (FinCEN) advisory. Specifically, FinCEN believes that illicit actors are abusing the St Kitts and Nevis programme to acquire citizenship in order to mask their identity and geographic background for the purpose of evading US or international sanctions or engaging in other financial crime. In particular, FinCEN advised that US financial institutions should conduct risk-based customer due diligence to mitigate the risk that a customer is disguising his or her identity with an St Kitts and Nevis passport in order to evade sanctions or engage in other financial crime. Article compliments IFC Review.
Base Erosion and Profit Shifting Project implementation in Mauritius
The Organisation for Economic Co-operation and Development (OECD) is an economic organisation made up of 35 member countries, with the aim of encouraging economic progress and world trade. In 2015, the OECD developed the Base Erosion and Profit Shifting (BEPS) Project, made up of reports on 15 action plans, with the aim to attack aggressive tax planning strategies undertaken by multinational companies exploiting gaps in tax regulations to shift profits to low or no-tax locations where such companies have little or no economic activity. In November 2016, the OECD presented the main text on the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI allows jurisdictions to implement results from the BEPS package domestically and through tax treaty provisions. Although developed by the G20 and OECD members, adherence to the BEPS Project was open to all countries by way of the OECD’s Inclusive Framework. On 5 July 2015, Mauritius signed the MLI, reaffirming its commitment to implement the minimum standards of the BEPS Project into its entire tax treaty network by the end of 2018. Mauritius has stated that 23 of its double tax treaties will be covered (and thus automatically amended) by the MLI, excluding 19 treaties, with a commitment to revise the said 19 treaties on a bilateral basis to ensure that they comply with BEPS minimum standards. How does the implementation of BEPS affect tax rules? Many of the 15 BEPS action plans focus specifically on changes to international tax rules with regard to transfer pricing, a strategy through which multinational companies allocate value amongst the assets and entities in their supply chain. The OECD considers that some companies allocate too much value to low-tax countries where they do not have any or enough substance and too little value to countries where they actually carry out their activities. Following BEPS implementation, many of those multinational companies will face new tax reporting requirements, including a “country-by-country report” to be provided by the company, which gives a detailed image of business results in respect of each country where the company operates. Such information will then be made available to any country where such company has a presence. In the spirit of BEPS, those measures are intended to allow the relevant countries to address the issue of profit shifting. What does the implementation of BEPS bring to Mauritius? The OECD states that BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises. Therefore, the BEPS measures once implemented will benefit developing countries and provide them with tools to mobilise domestic resources. In addition, specific challenges faced by developing countries and identified by them during consultations are currently being addressed through the work on the toolkits. These toolkits will be practical and based on real-life cases to facilitate the work of tax administrations. One of the main reasons for Mauritius to adhere to the BEPS Project was the country’s upgrade from a “Largely Compliant Jurisdiction” to an “OECD Compliant Jurisdiction” status in August 2017 following a review by The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum). Throughout the years, Mauritius has consistently upgraded its legal and regulatory framework and ensured its practical implementation in view of Mauritius becoming an OECD Compliant Jurisdiction. The signing of the MLI and the implementation of BEPS is considered as an essential part of this strategy, thus boosting its image as a business-friendly jurisdiction in the eyes of the international community. Criticisms of BEPS implementation in Mauritius Coupled with the implementation of the OECD’s Common Reporting Standard (whereby foreigners having a bank account in Mauritius are to be reported to their home countries through the Mauritius tax authority), many industry specialists are not welcoming BEPS implementation in Mauritius for the following reasons: the concept of BEPS is to weaken jurisdictions such as Mauritius by rendering them less attractive to investors (who seek to use Mauritius to structure their transactions) in favour of other OECD jurisdictions – the image of Mauritius as a low tax jurisdiction has been achieved through years of financial strategy development and conducted in full compliance with all laws and this is now compromised by the implementation of BEPS; BEPS has not been accepted and/or is not being implemented by many other jurisdictions, thus resulting in an imbalanced playing field when it comes to promoting Mauritius to investors and multinational companies; the biggest member of the OECD, the United States, has stated that, regardless of the BEPS Project, its Congress will implement tax rules that it believes work best for United States companies and the United States economy; a similar approach has been adopted by the United Kingdom and this serves to demonstrate the lack of commitment of the overall global community to the consensual approach of BEPS; and it is intended that only tax authorities shall receive sensitive information obtained under BEPS – however, there are genuine concerns about the security of data transmitted, and the risk that such data may be intercepted by other recipients. Adapting to BEPS implementation in Mauritius Given the very nature and complexity of the MLI (i.e. a multilateral convention that seeks to amend domestic laws as well as bilateral treaty agreements between two sovereign jurisdictions), it is anticipated that the implementation of BEPS will lead to increased controversy and may even result in double taxation, especially through the use of subjective terminology. This whole concept means that it is not possible to devise a single strategy that will suit all clients (given the diversity of jurisdictions involved). It is highly recommended for multinational companies to consult with their legal and tax advisers as to the specific effects of BEPS implementation on their related businesses in order to undertake global business planning with the flexibility to accommodate various BEPS-related tax rule changes. Article compliments IFC Review.
Bermuda Plays Key Global Insurance Role
Bermuda’s Premier, David Burt, told an insurance-linked securities sector conference that recent natural disasters around the globe have highlighted the key role the island’s insurers and reinsurers play. Burt listed a number of disasters in recent weeks, including wild fires in California, catastrophic earthquakes in Mexico, and three destructive Atlantic storms. He said the hurricanes are estimated to have cost 100s of billions of US dollars in economic losses, and USD100bn in estimated insured losses, with Bermuda (re)insurers expected to pay out about 25 percent of those losses for rebuilding efforts. Burt said the island remains the leading jurisdiction for insuring against catastrophic losses, pointing to the record 61 new ILS listings on the Bermuda Stock Exchange in 2016, and 218 listings to June this year. He also noted the innovation prompted by recent disasters, with reinsurers said to now be embracing improved, alternative capital models. Compliments IFC Review.
Antigua: Opposition party responds to reduction in Citizenship by Investment Programme fees
Following the 50 per cent reduction in processing fees for investment options in the Citizenship by Investment Programme (CIP), the leader of the Democratic National Alliance (DNA) is calling for an explanation. “It heightens suspicion as to why the government operates the CIP programme with so much secrecy…that is eventually exposed,” said leader of the DNA, Joanne Massiah. As a result of the reduction, which came into effect on August 1, a family of four will now pay a processing fee US $25, 000 instead of the previous processing fee of US $50, 000 if they choose the National Development Fund (NDF) US $200,000 investment option. Although the processing fees for the NDF and other CIP options have been reduced, the investment amount still remains the same. “The CIU is saying that it consulted with Cabinet in July and approval was granted to reduce the fees in August,” said Massiah. “Why is it that the government didn’t deem it necessary to alert the public to the fact that this decision had been made and give the reasons for that decision?” According to the CIU, the reason for the reduction in the processing fees was to increase Antigua & Barbuda’s competitiveness in the Caribbean region now that the country no longer has visa-free access to Canada. Massiah attempted to dispel this notion and questioned the possibility of a loss of visa-free access to other countries. “Given their argument that the fees have always not been competitive and unless the persons are exclusively interested in going to Canada why is it that we’ve had to reduce the fees? We have visa free access to Europe, England and other places that are being used to market the programme,” Massiah said. The DNA leader also called for more transparency around the fee reduction. “I believe that the CIU needs to come clean with the public. We need to understand the impact that the dropping of fees will have on the operation of the programme,” she said. Massiah said that the DNA was assured that due diligence would not be affected by the fee reduction, as they are to cover operational costs. However, she said that the programme will still be affected. “If the fees are used to pay salaries or as a part of marketing, then clearly the programme is going to be impacted in a significant way,” said Massiah. “Who then are we targeting to sell our passports to?” Massiah also told OBSERVER media that the DNA has penned a letter to the government questioning the CIP since July 13 and was given an unfavourable response. She said she will be making the letter public shortly. Article compliments IFC Review.
Credit Card Balances in Trinidad At All-Time High
Trinidadians have been swiping their credit cards more than ever. In fact, according to the Central Bank of Trinidad and Tobago’s (CBTT) 2016 Annual Economic Survey, credit cards balances were at an all-time high when compared to the take-up of consumer loans last year. According to the report released less than a week ago, credit card balances grew more than triple-fold last year. At the same time. mortgages had dropped. Real estate mortgage loans decelerated to 4.4 per cent at the close of 2016 compared with 8.9 per cent in 2015, the CBTT said. So too did car loans, as revealed in the report. “Within the consumer credit sector, the demand for loans to purchase motor vehicles – particularly new vehicles – eased notably,” the CBTT survey said. “This aligns with distribution sector data which show sales of new motor vehicles dropped by 13.7 per cent.” The Central Bank explained that lower vehicle purchases might have been influenced by the implementation of increased taxes on vehicles with engine sizes exceeding 1999cc that came into effect in May, 2016. Just last week, the increasing use of credit cards was confirmed by one local bank. During his address at the launch of the bank’s new platinum credit card service, Managing Director of RBC Royal Bank, Darryl White estimated that credit card usage went up about ten per cent. The CBTT’s survey, which covers the broader financial system, reported a rise in credit card balances from 3.9 per cent in 2015 to 13.7 per cent in 2016. “Growth in consumer credit gradually softened over the year, increasing by 6.6 per cent in December 2016, compared with growth of 8.7 per cent in December 2015,” the report added. Article compliments Caribbean360.com
Bad Loans Crippling Bank of the Bahamas
The Bank of the Bahamas (BOB) is facing an uphill battle to get out of the red as it continues to rack up millions of dollars in losses due to bad loans. According to a report on the bank’s financial performance for the fourth quarter ended June 30, 2017, the bank recorded net loan loss provisions of about $35.4 million during the final quarter of the fiscal year 2016 and $49.2 million since the start of 2017 “This was up by $20.1 million from the same quarter last year and up by $24.7 million year to date compared to the prior year. As a result of the increased credit loss expenses, the bank recognized a net loss of $32.8 million for the quarter and $43.8 million year to date,” the report stated. BOB acknowledged that the situation was worrying, stressing that its ultimate return to profitability is largely dependent on the performance of its loan portfolio. It was at pains to point out that it would have earned $2.5 million in net income for the reporting quarters and $5.4 million to date barring the losses from bad loans. “As such, a great part of the bank’s profitability will be contingent on resolving its non-performing loans.” The Bahamas Government has expressed concern about the bank’s continuing troubles. It recently announced that it would allow BOB to release itself of $166 million of non-performing loans to a special purpose vehicle – Bahamas Resolve Limited. The bank said this transaction would “provide substantial relief” for its credit portfolio and overall financial position. Meanwhile, BOB said it would continue to focus on transforming its business by focusing on initiatives around corporate governance, collections, cost optimization and customer care. Article compliments Caribbean360.com
Foreign Currency Crunch Could Drive T&T Car Dealers out of Business
Trinidad and Tobago’s foreign currency crunch is threatening to drive some used car dealers out of business. According to President of the T&T Automotive Dealers Association, Visham Babwah, operators have been forced to put the brakes on new car purchases because they are not getting enough of the foreign exchange they need. “The situation for the industry is grim. We are only receiving between 10 per cent and 15 per cent of the amount that we need for our businesses to be sustained,” Babwah told the Trinidad Guardian newspaper. He disclosed that while banks have allowed dealers to use their credit cards to make a purchase, they are being hindered by the low credit limit. “The bank told us we could use our credit cards, which have very small limits, which is around US$10,000. In the scheme of purchasing cars for someone’s business, that is very small,” he said. “For example, one car could cost US$20,000.” Babwah made a case for the car dealers to receive a better deal from the banks, pointing out that some wealthy individuals have credit cards with much larger limits to make their foreign purchases. “They have enough credit and they would utilize the amount of US dollars in one swipe that I would use in a year for my business,” he claimed. Babwah warned the current situation is unsustainable and he stressed that small and medium sized enterprises urgently needed help to keep their businesses going. In response, the Bankers Association of Trinidad and Tobago (BATT) explained that foreign exchange inflows into the country have declined significantly and commercial banks have been asked to put trade and manufacturing customers first. It however assured that commercial banks are working to manage customer expectations through a “very difficult market reality” where no industry, group or individual may be able to receive all the US dollars that they require. In the meantime, the Automotive Dealers Association has called for a meeting with Finance Minister Colm Imbert. Article compliments Caribbean 360.com
Bank of Jamaica to start foreign exchange auction
The Bank of Jamaica (BOJ) will commence selling foreign exchange (FX) to Authorized Dealers (ADs) and eligible cambios via a competitive bidding process, effective July 26. The introduction of this new framework will follow a pilot exercise on Wednesday. Under this process, the BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT), BOJ will pre-announce, up to four weeks ahead, the quantity of FX that it intends to sell to the market on Wednesday of each week. All authorised dealers and eligible cambios will be invited to submit bids to purchase FX from Bank of Jamaica at exchange rates that they specify. The Bank will publish a report from each operation on the same day, including the weighted average exchange rate arising from the operation, and will also introduce the publication of midday weighted average exchange rates. The Bank may also sell foreign exchange to authorised dealers and eligible cambios outside of this weekly schedule if circumstances merit. The implementation of this upgrade to the Bank’s operations forms a part of Bank of Jamaica’s ongoing effort to enhance the effectiveness of its monetary policy transmission and foreign exchange operations. The introduction of B-FXITT will not affect the manner or freedom with which members of the public currently purchase or sell foreign exchange from or to their banks and cambios. Article compliments LOOP News Barbados.
BVI firms hold $1.5T in assets, benefit global economy
An economic impact report commissioned by BVI Finance has concluded that the British Virgin Islands brings a substantial net benefit to governments worldwide, reports Cayman Compass. The report “Creating value: The BVI’s global contribution” by consulting firm Capital Economics found that the 417,000 companies registered in the islands hold about $1.5 trillion in assets globally. Many of the companies are registered in the BVI to facilitate cross-border trade and investment. For instance, more than 140 corporations listed on the stock markets in London, New York and Hong Kong maintain a subsidiary in the BVI. About a quarter of the companies’ assets represent investment vehicles, whereas family wealth and property holdings make up about 5 percent each. The investment flows mediated by the BVI support around 2.2 million jobs worldwide, the report noted, especially in Asia, where about 40 percent of the assets held by BVI companies are located. European clients represent about 20 percent of BVI companies. The U.K. alone constitutes 12 percent of the value of BVI companies, both in terms of the location of the ultimate beneficial owner and the location of the assets. “The scale of the BVI’s global contribution to investment and jobs sheds a new light on the debate around its impact on the tax receipts of other nations,” Capital Economics stated, and concluded, “The BVI is a substantial net benefit to governments worldwide.” Commenting on the findings, Interim Executive Director of BVI Finance Lorna Smith said the results of the study clearly demonstrate the significant contribution the BVI makes to the global economy. “Not only does the BVI enable cross-border trade and investment; it also supports millions of jobs, and generates substantial tax receipts for governments globally. This brings tangible benefits to the lives of employees, voters, families and businesspeople around the world,” she said. Ms. Smith added the report was equally clear in stating that the BVI is not a center for corporate profit shifting. “This helps clarify once and for all some of the inaccuracies and misunderstanding about what the BVI is, and the valuable role it plays in the global economy.” Like the Cayman Islands, the BVI stresses that it is not a tax haven but rather a tax-neutral jurisdiction, which does not reduce or eliminate any tax liability in other jurisdictions. The report argued that the BVI is not a material center for corporate profit shifting. Multinational companies that seek to optimize their tax position would look to conduct any ‘profit shifting’ through jurisdictions that gave them protection from double taxation, and where they would be exempt from withholding charges, Capital Economics said. But, “The BVI offers little protection to businesses from so-called ‘double taxation’ in another jurisdiction or from ‘withholding taxes’ elsewhere. Multinational companies that use their transfer pricing arrangements to shift profits into the jurisdiction will not be sheltered from taxes due elsewhere.” This is in stark contrast to European jurisdictions like the Netherlands, which maintains a large number of double taxation treaties that reduce withholding taxes for income from dividends, interests and royalties, or low tax jurisdictions like Luxembourg and Ireland, which offer low tax rates on intra-group interest payments or royalties from intellectual property. These mechanisms are much more suitable for the shifting of profits to low tax locations to avoid taxation. Mark Pragnell, the author of the report, said in an interview with the Financial Times that globalization had increased the use of cross-border structures by multinationals, whereas the use of BVI companies for private wealth management was diminishing. Mr. Pragnell conceded that it was not clear how much of the capital flows through BVI companies represented round-tripping, a process whereby capital is sent to offshore vehicles and then brought back to its country of origin under the guise of a foreign investment to take advantage of government benefits and lower taxes or to circumvent regulations. But he maintained that the main motivation for channeling money through the BVI was to take advantage of its secure legal framework. Capital Economics believes that BVI companies could be used to avoid up to $750 million of tax each year. “To put this in context, the United Kingdom tax authorities estimate their annual ‘tax gap’ at US$59 billion alone – so any leakage through the BVI is immaterial against other sources of tax loss,” the report said. “Moreover, our estimate of the theoretical maximum amount of tax avoided assumes that the only and every use of a BVI Business Company is tax avoidance. In reality, we believe the actual number will be a small fraction of this.” At the same time, investment flows channeled through BVI vehicles would bring substantial net benefits to governments onshore. For instance, the report estimates that the tax supported by employment related to investments mediated by BVI companies is $15.7 billion, far outweighing the potential tax loss onshore from deferred tax payments or the avoidance of property transaction taxes. Locally in the BVI, tourism accounts for one in four jobs. However, the business and finance industry generates 60 percent of all government revenues. It employs 2,200 people directly, supports another 3,000 jobs and produces $330 million of gross value added, the report found. Two-thirds of the business and finance jobs are held by BV Islanders, or belongers. Article compliments IFC Review.
Southwest Airlines Drops Two of its Three Cuba Routes
Southwest Airlines has joined several US carriers who’ve cut Cuba routes because they’re not performing as well as expected. At the end of the day on September 4, it will cease flights to Santa Clara and Varadero, less than a year after introducing those services with much fanfare. It will continue flying to the Cuban capital, Havana, which it currently serves twice daily from Fort Lauderdale and once from Tampa, and has applied with the US Department of Transportation for a third daily round trip from Fort Lauderdale. “Our decision to discontinue the other Cuba flights comes after an in-depth analysis of our performance over several months which confirmed that there is not a clear path to sustainability serving these markets, particularly with the continuing prohibition in US law on tourism to Cuba for American citizens,” said Steve Goldberg, Southwest Airlines’ Senior Vice President of Ground Operations and lead Executive sponsor for Florida. “Access to Cuba remains important to our South Florida customers and this shift in focus will answer their continued calls for our low-fare value with bags fly free in serving the Cuban capital.” There was a rush by airlines to apply for the rights to serve Cuba’s international airports when the island opened up to US airlines last year. However, some of the new routes have not panned out as expected. That, coupled with US President Donald Trump earlier this month ordering tighter restrictions on Americans traveling to Cuba and a clampdown on US business dealings with the island’s military, after his predecessor President Barack Obama loosened those restrictions, has influenced decisions on flights to the Caribbean island. Last month, Southwest Airlines’ chief executive officer Gary Kelly had hinted that cutbacks might be coming, saying, “Cuba is something we’ll have to continue to watch. Havana looks like a normal developing market, and the other two cities have very modest traffic demand at this point….I don’t want to pull the plug yet, but the demand is going to have to pick up to sustain those flights.” With its decision to nix the Santa Clara and Varadero routes, Southwest is offering refunds to customers with reservations for flights to those destinations beyond September 4. Article compliments Caribbean 360.
Trinidad and Tobago only tax haven not OECD-compliant
The Organisation for Economic Co-operation and Development (OECD) revealed that almost all tax havens around the world have now made progress in meeting transparency standards in the run-up to a G20 summit next month, reports Economia. In July 2016, G20 countries had called on the OECD-hosted Global Forum to devise criteria to identify jurisdictions that it believed have not made sufficient progress towards implementation of agreed international standards. The OECD said that 15 jurisdictions which previously had a less than satisfactory rating on their peer reviews against the Exchange of Information on Request (EOIR) standard, were assessed on their progress. Of the 15 countries, only Trinidad and Tobago was unable to demonstrate progress to warrant any upgrade to its rating, while the Marshall Islands were only partially compliant. All the remaining 13 countries have been largely compliant. These were Andorra, Antigua and Barbuda, Costa Rica, Dominica, the Dominican Republic, Guatemala, the Federated States of Micronesia, Lebanon, Nauru, Panama, Samoa, the United Arab Emirates and Vanuatu. The jurisdictions made a number of changes in order to be upgraded, including the elimination of strict bank secrecy and bearer shares, improved access to accounting records and a more rigorous oversight and enforcement of obligations to maintain information. They also expanded the breadth of the exchange networks including signature of the Multilateral Convention on Mutual Administrative Assistance on Tax Matters. The organisation said that a second phase of reviews is currently underway, with the first outcomes to be released later this year. Article compliments IFC Review.
St Lucia’s citizenship by investment boss ‘sent on leave’
Reports from St Lucia indicate that the head of the nation’s Citizenship by Investment Unit (CIU) has been sent on administrative leave. HTS News4orce said it has been “reliably informed” that Cindy McLean, chief executive officer of the (CIU) is now on leave “with immediate effect”. No further details on this move are available. She has been the agency’s CEO since October 2015. Last month she gave a conflicting account on CIU policy following the release of a joint statement from Invest St Lucia and and the CIU regarding the Desert Star Holdings project. Unaware The statement, and the delay in issuing it, was jumped on the by opposition St Lucia Labour Party, who warned that the two organisations should not “mislead the people”. Speaking in an exclusive with HTS News4orce, McLean said she was “not aware” of the statement, and it was published when she was off-island. It is strictly against CIU policy to publish or publicly disclose the status of ongoing negotiations with investors, she added. No timeframe for McLeans leave has been announced. WIC News has approached the government, CIU and St Lucia Labour Party for comment on the matter. Article compliments IFC Review.
St Lucia: PM’s citizenship by investment plans ‘raise more questions than answers’
The St Lucia Labour Party (SLP) has raised concerns that statements made by Prime Minister Allen Chastanet over the Citizenship by Investment programme are “not consistent with the laws of St Lucia”, reports WicNews.com And his announcements, made in Geneva last week, are being reported by international media without taking this into consideration. Chastanet revealed that under new plans, if someone who obtained citizenship through CIP later has a child, all their decedents can apply for citizenship as well. But the SLP was quick to dampen that idea. “The laws of St Lucia do not allow for granting citizenship in such circumstances. The law presently only allows for one generation only, to inherit citizenship by descent,” the party said. “A descendent of a person who has been granted citizenship through the CIP cannot pass on citizenship to their children. These children must be born in St Lucia to be granted citizenship. “The SLP calls on the Prime Minister to explain his statements and whether there is an intention to change the laws of St Lucia to allow for what he announced.” WIC News has approached the government for comment on the SLP’s comments. Foreign agents? Another aspect of the Chastanet’s comments is the rates paid to registered agents – and the SLP have questioned the timing of his announcement, which came on a trip to Switzerland. “The Prime Minister must explain what is meant when he stated the government will be paying a guaranteed commission to all registered agents promoting the US$100,000 donation option. The SLP notes that there are only nine registered agents, who according to the CIP guidelines must be St Lucian and St Lucia-based, and whose role is to submit applications to the CIP Unit and who are paid by the applicants. “The Prime Minister needs to, therefore, explain why his announcement was not made in St Lucia to these agents and whether he has already approved for foreign-owned companies to now become registered agents.” Use of CIP funds In a comprehensive statement from the SLP, the opposition urge the prime minister to be more transparent about the financial details of the Citizenship by Investment Programme. “St Lucia Labour Party is asking the prime minister to explain how much money the government of St Lucia will retain on each passport and, more importantly, how is the CIP revenue being used,” they said. “The SLP notes that the Regulations were changed on 1 January 2017 to allow the CIP Unit to retain US$20,000 on each donation made for marketing and promotional purposes yet to date no information has been given as to how these monies will be used. “Then the global marketing agencies are to be paid $10,000 for the same marketing and promotional work. And with announcements last week of a guaranteed payment to each registered agent, said to be another $10,000, it means that the government will only receive $60,000 for each citizenship granted through donation. “The St Lucia Labour Party is strongly condemning this cheapening of the citizenship programme and once more calls on the UWP government to restore the original arrangements which ensured that the programme was a well- respected programme for value, security, due diligence and exclusivity.” Article compliments IFC Review.
Consumer and Business Confidence Down in Jamaica
Jamaican companies and consumers appear wary of the economy, with results from the latest survey of businesses and consumers showing a decline in confidence. And according to pollster Don Anderson, confidence is at an all-time low when compared to last year. “Unlike previous quarters, we are now seeing consumer confidence slightly contracting. Their spending plans have contracted and intentions to go on vacation have contracted as well. Income expectations have also softened,” he reported. “In the previous quarter, consumers were saying ‘jobs are going to come on stream, we are going to get some of it, we are going to participate in the growth of the economy, benefits will accrue to us’. What they are now saying is that ‘we are not so sure’.” While saying that he would await the results of the survey of the second quarter to measure whether confidence is on a downward spiral, Anderson says there was already strong evidence with all areas of the consumer indices showing declines. Consumer outlook for the economy for the year ahead weakened, down to 30 per cent from 38 per cent of consumers expecting an improved economy. Job gains were also lower, with only 26 per cent of consumers expecting a rise in job availability, down from the 42 per cent recorded in the first quarter of 2016. On the business side, confidence for the first quarter of 2017 stood at 139.3, slightly below the last quarter’s 142. Anderson reported that firms were somewhat less likely to anticipate a worsening economy in the year ahead, 16 per cent down from the 22 per cent reported in the last quarter. Article compliments Caribbean360.com
A Foreign Exchange Shortage is Affecting How Much Trinidadians Pay For Chicken
Chicken prices are rising in Trinidad and Tobago and local retailers are warning that until the government intervenes they will continue to rise. President of Pluck Shop Association Rasheed Karim says consumers have been paying more for live chicken over the last two months. The reason? Because a shortage of foreign exchange has led large poultry producing companies to hike their prices. Currently consumers are paying between $5.50 to $6.50 for live chicken in Trinidad and as much as $8 per pound in Tobago. Karim is urging the Government to intervene and suggests that the only way to lower prices is to provide incentives to get more small poultry farmers back into production. “I am calling on the Government to create some kind of subsidy [for] the poultry market, to encourage the small farmers to come back.…It can reduce the price so that customers won’t have to pay more.” Karim expressed concern that there has been a drop in sales since the increase. He also appealed to authorities to remove the Value Added Tax (VAT) on machinery for processing chicken. He said this would help to drive down the price of the poultry. Article compliments Caribbean360.com
United Latest Airline to Suspend Venezuela Flights
United Airlines will become the latest in a string of carriers to suspend flights to Venezuela next month in a move that will further limit access to the country embroiled in increasingly violent protests and economic free fall. United spokesman Charles Hobart cited low demand for the cancellation of the daily service between Houston and Caracas. “Because our Houston-Caracas service is not meeting our financial expectations we have decided to suspend it, effective July 1,” he told Bloomberg. Growing numbers of opposition supporters, who accuse the government of mismanagement and are calling for early elections, have staged near-daily street protests since the end of March. United, whose flights to Caracas were once popular with Texan oil executives and US-based Venezuelans, is the most recent in a series of airlines to pull out or reduce flights to Venezuela. In May, TAP – Transportes Aereos Portugueses – stopped selling plane tickets in Venezuela because it wasn’t receiving the money from those sales. Last year, carriers asked the US Department of Transportation for antitrust immunity so they could discuss ways to retrieve a whopping US$3.8 billion tied up by Venezuela’s economic collapse, with the government virtually halting repatriation of past ticket sales made in bolivars, the local currency. American Airlines, which had been the largest carrier by capacity to Venezuela, took a $592 million special charge in 2015 to write down the value of its ticket sales in bolivars. Delta has also written down the value of past Venezuelan sales in bolivars and has reduced flights drastically since 2014. Last year, Deutsche Lufthansa AG dropped its flights from Frankfurt; Chile-based Latam Airlines Group SA also suspended its Caracas service from Brazil, Chile, and Peru; and Grupo Aeromexico SAB ended flights between Venezuela and Mexico City. Air Canada halted flights to Caracas back in March 2014, citing the civil unrest. Article compliments Caribbean360.com
Puerto Rico Votes To Become 51st US State
Puerto Rico’s Governor Ricardo Rossello has announced that the US island territory has overwhelmingly chosen statehood in a nonbinding referendum held yesterday amid a deep economic crisis that has driven hundreds of thousands of its citizens to the US mainland. According to preliminary results, nearly half a million votes were cast for statehood, more than 7,600 for free association/independence and nearly 6,700 for retaining the current territorial status. The participation rate was just 23 percent with roughly 2.26 million registered voters, prompting opponents to question the validity of a vote that several parties had boycotted. Rossello was nevertheless upbeat in announcing the result. “From today going forward, the federal government will no longer be able to ignore the voice of the majority of the American citizens in Puerto Rico,” he said. “It would be highly contradictory for Washington to demand democracy in other parts of the world, and not respond to the legitimate right to self-determination that was exercised today in the American territory of Puerto Rico.” The US Congress, however, has the final say on any changes that may be made to the island’s political status. The governor nevertheless vowed to push ahead with his administration’s quest for statehood, which was his top campaign promise. He said he would create a commission to ensure that Congress validate the referendum’s results. “In any democracy, the expressed will of the majority that participates in the electoral processes always prevails,” he said. “Puerto Rico voted for statehood.” The referendum coincided with the 100th anniversary of the United States granting US citizenship to Puerto Ricans, although they cannot vote in presidential elections and have only one congressional representative with limited voting powers. It is widely thought that the island’s territorial status has contributed to its 10-year economic recession, which has seen nearly half a million Puerto Ricans flee to the US mainland and is said to have been largely sparked by decades of heavy borrowing and the elimination of federal tax incentives. Although exempt from US federal income tax, Puerto Rico still pays Social Security, Medicare and local taxes and receives less federal funding than US states. The island’s 3.4 million people struggle with a 12 percent unemployment rate and have been hit with new taxes and higher utility bills. Food is 22 percent more expensive than that on the US mainland and public services are 64 percent costlier. Opponents of statehood are nevertheless concerned that the island will lose its cultural identity and warn that Puerto Rico will struggle even more financially because it will be forced to pay millions of dollars in federal taxes. Article compliments Caribbean360.com
Cuban entrepreneurs start first private business group
A handful of entrepreneurs have quietly formed communist Cuba’s first private small business association, testing the government’s willingness to allow Cubans to organize outside the strict bounds of state control. More than a half million Cubans officially work in the private sector, with tens, perhaps hundreds, of thousands more working off the books. Cuba’s legal system and centrally planned state economy have changed little since the Cold War, however, and private business people are officially recognized only as “self-employed,” a status with few legal protections and no access to wholesale goods or the ability to import and export. The government is expected to take an incremental step toward changing that Thursday when Cuba’s National Assembly approves a series of documents updating the country’s economic reform plan and laying out long-term goals through 2030. Those goals include the first official recognition of private enterprise and small- and medium-size businesses, although it could be years before any actual changes are felt on the ground in the country. The Havana-based Association of Businessmen is trying to move ahead faster, organizing dozens of entrepreneurs into a group that will provide help, advice, training and representation to members of the private sector. The group applied in February for government recognition. While the official deadline for a response has passed, the group has yet to receive either an OK or negative attention from authorities, leaving it in the peculiar status known in Cuba as “alegal” or a-legal, operating unmolested but vulnerable to a crackdown at any time. “People have approached with a lot of interest but they don’t want to join until we’re officially approved,” said Edilio Hernandez, one of the association’s founders. Trained as a lawyer, Hernandez also works as a self-employed taxi driver. “Many people really understand that entrepreneurs need a guiding light, someone who helps them,” he said. Another founder, Rodolfo Marino, has a construction license and has worked privately and under contract to state agencies. He said organizers of the association have gone door-to-door trying to recruit members by convincing them they need independent representation. The group says roughly 90 entrepreneurs have signed up. Without legal recognition, the group is not yet charging membership fees, the organizers say. Until then, they meet occasionally in Marino’s Havana home to plan their path forward, which includes legal appeals for government recognition. “We hope to push the country’s economic development forward,” he said. The number of officially self-employed Cubans has grown by a factor of five, to 535,000 in a country of 11 million, since President Raul Castro launched limited market-based reforms in 2010. The government currently allows 200 types of private work, from language teacher to furniture maker. In reality, many officially self-employed people have become owners of small business, some with dozens of employees and hundreds of thousands of dollars in annual revenue — big number for a country where the monthly state salary is about $25. Without access to government-controlled imports, exports or wholesale supplies, business owners are emptying the shelves of state stores, either by snapping up items as soon as they arrive or buying them stolen on the black market. That leaves them vulnerable to crackdowns and frequent extortion from state inspectors. The government has taken a few tentative moves toward easing the situation in recent months — opening stores where owners of some of the country’s 21,000 bed-and-breakfasts and 2,000 private restaurants can buy large quantities of goods, although still at retail prices. The state has also promised special access to gas and car parts to taxi drivers who comply with widely flouted government caps on fares. Along with those small steps, the future of the Association of Businessmen is a gauge of Cuba’s openness to private enterprise and its ability to move forward, the group’s founders say. “We really hope they approve us,” said Hernandez, the lawyer and taxi driver. “If they don’t, we’ll be in the hands of a state that considers us illegal and we won’t be able to reach our goal of representing entrepreneurs. If they do, it will be a sign that things are changing.”
Creditors ask court to limit Puerto Rico’s authority over its bank account
OppenheimerFunds, Franklin Advisers, Inc., and the First Puerto Rico Family of Funds asked Judge Laura Taylor Swain on Monday to limit the limit the authority of the banks in which the government has its accounts to continue honoring transfers, deposits and withdrawals. “Any order entered in connection with the Bank Transaction Motion must avoid providing banks with broad releases of liability,” the creditors said. The petition is contained in a motion in which the entities are objecting the government’s motions on how its bankruptcy process should be managed. The entities are holders of bonds from Puerto Rico and its instrumentalities. The Family of Funds are holders of over $3.5 billion in bonds from the Sales Tax Financing Corp. (Cofina by its Spanish acronym), and over $3.6 billion of other uninsured bonds issued by the Commonwealth and other territorial instrumentalities, including over $1.8 billion in uninsured Commonwealth general obligation bonds, making them one of the largest creditor group. The Commonwealth of Puerto Rico and Cofina by and through the Financial Oversight & Management Board for Puerto Rico had asked the court for an order confirming the authority of their banks to continue honoring all transactions without incurring in liability days after filing for Title III bankruptcy. The creditors said provisions that appear to insulate the banks from virtually any form of liability so long as they are acting in response to the government’s instructions, must be stricken or narrowed. “An order meant to provide comfort that section 363 does not apply should not mislead a Bank into believing that it is relieved of existing obligations or duties, and any resulting liability therefore,” they said. They noted that Promesa provides that if property is transferred in violation of a pledge, the transferee is liable for the transfer. “A bank which serves as an intermediate transferee may be liable under Promesa. This is an issue which should be resolved after a full and fair opportunity to be heard, not as part of a first-day administrative order,” they said.
Air Canada adds St Vincent and Belize to new routes
Air Canada has announced its first ever international flight to St Vincent. The air carrier has also added Belize to its list of new destinations. Air Canada will be flying to St Vincent’s new Argyle International Airport weekly on Thursdays on an Airbus A319 operated by Air Canada’s Rouge brand, from December 14 to April 12. Air Canada will also have weekly Friday flights from Toronto to Belize City, operating on an Airbus A319, also on Rouge. “Air Canada is continuing its strategic, global expansion with a diverse range of exciting new non-stop routes this winter,” said Benjamin Smith, President, Passenger Airlines at Air Canada. “The addition of the first long-haul, international scheduled service to St. Vincent in the Caribbean offers new choices for travellers looking to escape Canadian winters.” Air Canada is boosting its 2017-18 schedule with six new seasonal routes, including five on Air Canada Rouge – Vancouver-Orlando, Toronto-Belize, Toronto-St. Vincent, Montreal-Lima and Montreal-Phoenix – and one on Air Canada (Vancouver-Melbourne). Article compliments LOOP News Barbados.
ECCB Governor: ‘Post-truth’ world poses challenge to leaders
The Governor of the Eastern Caribbean Central Bank says it is of utmost importance is for those in the industry to raise their leadership capacity since in every sphere since “leadership matters – always has and always will.” Governor Timothy Antoine, in addressing the Imperatives for Financial Sector Development in the Caribbean, says this is one of three imperatives that needs to be considered as the financial sector in the Caribbean continues to focus on development. Delivering the keynote address at the Domestic Financial Institutions Conference, held at the Lloyd Erskine Sandiford Centre, he said: “In this period of rapid global change and heightened uncertainty, we need to fully grasp the fundamental distinction between leadership and management.” He says management is running a business while leadership is changing a business and at the core of leadership is dealing with change – something that the financial sector deals with every day. “Our leadership in the financial sector assumes even greater significance in the world in which we now live, a world that is increasingly described as a post-truth world,” he stated. He noted that in this “post-truth world”, fake news and alternative facts – properly described as untruths and lies – are gaining currency. He says while he agrees with those who may argue that a post-truth world is not a new phenomenon, what is of concern to the financial sector is the pace, potency and pervasiveness of social media – “a phenomenon that is now game changer, which can be a blessing and a curse.” “Somebody might be wondering, why I am going there. But, the reality is that all our plans and our hard work can be undermined in seconds by the phenomenon of fake news. So these are not things which we can ignore where we sit,” he said. He said it is for this reason why risk management and business continuity function must be broadened and become more agile to anticipate and address the ever-growing volume of half-truths, post-truths, alternative facts and fake news. “We ought to ensure that our decision-making is premised on facts rather than fake news. We have to get our facts straight given the far-reaching impact of our decisions in the financial sphere, and we have to be active rather than reactive operators in the sphere of public communication and information,” Governor Antoine cautioned. The Conference, now in its eighth year, is an annual one-day conference that provides a forum for senior officials from the financial services sector to discuss domestic and international matters that have implications for the local landscape. Article compliments LOOP News Barbados.
‘Ball In Bahamas Court’ Over Tax Exchange Pledges
“The ball is in the Bahamas’ court” to meet its automatic tax information exchange commitments, a senior industry executive yesterday saying there is “no alarm” about this nation having to alter its approach, reports Tribune. Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business that the private sector acknowledged the Government may “have to consider a policy change” on how this nation implements the Common Reporting Standard (CRS). She was speaking after Organisation for Economic Co-Operation and Development (OECD) representatives last week warned that the Bahamas must “take quick action” to avoid being ‘blacklisted’. Monica Bhatia, who leads OECD’s Global Forum secretariat, said the Bahamas was perceived as “the last tax haven standing” and an “outlier” because it was the sole financial centre of any significance to persist with the bilateral approach to CRS implementation. Emphasising that the Bahamian financial services industry’s priority was to avoid any ‘blacklisting’, Ms McCartney said this objective meant there was an acceptance the CRS implementation policy may need to change given the increasing pressure from the OECD, European Union (EU) and their members. “There is acknowledgement that the Government will have to consider whether we meet the requirements of the OECD, and also whether there needs to be a change in policy,” the BFSB chief executive told Tribune Business. “I do not believe the laying on the table, so to speak, that we need to consider the Multilateral Convention on Tax Matters, caused any alarm. No overwhelming alarm or concern was expressed by industry to the possibility of us having to take a new course.” As revealed by Tribune Business, the Bahamas is now isolated, and under growing pressure, to bow to international demands that it automatically exchange tax information on a ‘multilateral’ basis, with the EU and its members refusing to accept this nation’s preferred approach. The Bahamas previously agreed to implement the CRS, the OECD global standard for automatic tax information exchange, via a bilateral approach that involved negotiating agreements on an individual country-by country basis. However, the OECD and its developed country members have been steadily increasing the pressure on the Bahamas to switch to the ‘multilateral’ approach, requiring this country to negotiate tax deals with all-comers at once. The Bahamas has been left exposed by the decisions of Hong Kong, Panama and the United Arab Emirates to switch from the bilateral to multilateral approach, which has left this nation as the last international financial centre (IFC) of significance that is sticking to the former. Tribune Business sources present at last week’s seminar with the OECD said the body had cleverly modified its arguments, and objections, regarding the Bahamas’ choice of the bilateral implementation route. Given that it had previously approved the ‘bilateral’ route as an option, the OECD knows it is open to charges of ‘hypocrisy’ and ‘goal-post moving’ if it simply demands the Bahamas goes multilateral. Instead, its officials last week argued that the Bahamas had left it too late to use the bilateral approach to meet its automatic tax information exchange commitments by the September 2018 deadline. The OECD’s presentation to the Bahamian financial services sector was described as “dripping with sarcasm” by one observer, who said it employed the theme: ‘Why are you always the last guys to comply?’ Its representatives employed the analogy of a high-rise building to describe the Bahamas’ situation, saying that all other countries were taking the elevator to the top via the multilateral approach, and this country was the only one using the stairs. Several financial industry sources, speaking on condition of anonymity, told Tribune Business that given the EU’s stance and the pressing compliance deadline, combined with this nation’s bilateral ‘isolation’, the Bahamas was unlikely to be able to “hold out”. Hope Strachan, minister of financial services, appeared to subtly acknowledge this last week when she spoke to Tribune Business, her words effectively laying the ground for a policy shift by whoever is elected as the next government. Tribune Business also understands that the Bahamian financial services industry, and its various working groups, have already been asked for feedback on the potential impact of switching to the ‘multilateral’ CRS implementation approach. “My take away from it was this,” Ms McCartney told Tribune Business. “The ball is in the Bahamas’ court to demonstrate it can effectively implement the CRS. “We have to consider objectively the extent to which we can stand up to scrutiny. If policymakers determine, despite our best efforts, that we are not where we need to be, a policy position will have to be taken. “The question is: Can we close sufficient agreements in the timeframe we have? Legitimate assessments have to be done by policymakers, and we have to do enough in the best interests of the sector to avoid blacklisting and ensure we live up to our commitments. There is continued agitation for us to consider signing the Multilateral Convention.” Ms McCartney said last week’s seminar had clarified issues surrounding the CRS’s implementation and provisions, and identified provisions of the Multilateral Convention where the Bahamas could seek to obtain “reservations”. “Ultimately, whatever we do has to put us in a position to avoid adverse listings,” she told Tribune Business. “There are two things the industry is concerned with. We don’t want to be on any blacklist, and two, we are mindful clients are concerned with data protection and privacy.” To allay the latter concern, Ms McCartney said the OECD was conducting assessments of all Global Forum members’ data protection regimes to ensure they are up to standard, and will publish a list of those countries that meet the requirements. A ‘blacklisting’ along the lines of the 2000 listing by the Financial Action Task Force (FATF) would threaten the Bahamas’ reputation and integrity, causing a potential loss of business and impeding access to developed countries’ financial markets. Article compliments IFC Review.
Caribbean: Offshore jurisdictions asked to embrace transparency
In a world of data breaches and political unrest, the concept of confidentiality faces a certain death, warned British Virgin Islands lawyer Tim Prudhoe on Tuesday, reports Cayman Compass. Rather than fear the future, the Kobre & Kim partner advised offshore tax jurisdictions to embrace transparency and find benefit in a turbulent world. “There are lots of people wanting to plan their assets. We are just as well placed as others to take advantage of that heightened anxiety,” Mr. Prudhoe said during the 2017 STEP Caribbean Conference at the Kimpton Seafire Resort. The Society of Trust and Estate Practitioners event gathered business professionals from across the region for three days of discussion on tax policy, asset protection and information exchange. On day two of the event, Mr. Prudhoe described a “veritable crusade for transparency,” muddled by misinformation and public perception. Despite headline-grabbing leaks like the Panama Papers, Mr. Prudhoe argued that public relations disasters are the least of the financial industry’s worries. He pointed out that while the leak captured public attention, it resulted in very little litigation. The case did, however, indicate significant public interest in tax transparency. To stay competitive in the marketplace, he encouraged offshore jurisdictions to embrace the push toward openness. Given the global abundance of tax options, he warned that non-transparent jurisdictions risk losing their competitive edge. He said privacy in an absolute sense can no longer be expected and is no longer a selling point. He pointed to a recent survey in which 77 percent of those polled expected a network of tax information exchange agreements to be established by 2020. “One way or another, there is going to be information exchange,” he said. He also warned that clever lawyers will not be the ones to save the day. Jurisdictions that rely on such individual’s risk perpetuating the image created by John Grisham’s legal thriller, “The Firm,” he said. Sophisticated legal frameworks should instead serve as backup for above-board policies. For those who embrace change, he said opportunity awaits. “There is a great deal to be optimistic about as long as we don’t spend too much of our time worrying about people picking on us,” he said. For attendees who may have been unsettled by Mr. Prudhoe’s outlook, speaker Conrad Griffiths of Griffiths & Partners focused his presentation on balancing information exchange with privacy rights. He outlined legal avenues to protect client confidentially and to challenge possible violations. Other topics covered during the three-day event included global banking issues, the rights of foreign trustees in U.S. courts, and regional considerations for Latin America, Asia and the Caribbean. Wednesday is the final day of the conference and will include breakout sessions on dispute arbitration, Brexit, and investment funds. The STEP Caribbean Conference has been held for 20 years in countries across the region. Upcoming STEP conferences will be held in California, Canada, Israel, Scotland and Australia, among other locations. Article compliments IFC Review.
Questions Surround Money Paid into US Bank Account of Bahamas Minister
A Bahamian Government minister has come under scrutiny as details surface that he received over $94,000 from a high profile businessman that was deposited into a US bank account. Labour and National Insurance Minister Shane Gibson admitted to receiving the funds between August 2011 and January 2013, but insists the transactions were above board. Documents obtained by The Tribune newspaper detailed monthly deposits in the amount of $5,000 by Canadian fashion mogul Peter Nygard, a controversial permanent resident in the Bahamas prior to the 2012 general election and even after Gibson was appointed as a minister. The majority of the payments, which totaled $94,131.10, were identified as compensation for professional services. According to the Tribune, Gibson initially said the businessman paid the money “for no particular reason”. In a follow-up a statement, he claimed the money was used as a contribution to his 2012 election campaign and for community initiatives in the Golden Gates constituency, such as scholarship to students. “Thanks to contributions from Mr Nygard and others, I, as a member of Parliament, was able to continue many community initiatives like a scholarship programme, awarding tens of thousands of dollars in scholarships to deserving students in my constituency whose parents could not afford to cover their full tuition. “Additionally, Golden Gates was able to run a successful election campaign in the run-up to the 2012 general election. Following our victory at the polls, those contributions enabled me to pay off debt incurred during the campaign season. I think it is sad and unfortunate that those who oppose me would seek to tarnish something that has benefited so many people in my constituency simply to grab headlines and win a seat,” he said. Gibson made it clear that he would not be distracted from serving his constituents. While there are no laws governing election campaign financing in the Bahamas, the transaction is likely to be a major talking point ahead of the May 10 general election. Nygard has reportedly made previous claims that he funded the election campaign of the Progressive Liberal Party – a claim that Gibson has denied. Back in 2007, Gibson, who served as Immigration Minister, was forced to step down, after a scandal involving American actress and model Anna Nicole Smith, over his fast-tracking of her permanent residency in the Bahamas. Article compliments Caribbean 360.com
Trinidad President Tells Rest of Region It’s Time to Dump UK Privy Council
Trinidad and Tobago President Anthony Carmona has expressed frustration that his country and other CARICOM states have not replaced the Privy Council with the Caribbean Court of Justice (CCJ) as their final authority in legal matters. Though 12 of the 15 CARICOM territories have signed the agreement establishing the CCJ, which was launched in 2005 as the final arbiter in legal disputes among and within regional members, only Barbados, Guyana, Dominica and Belize have accepted this court as the end decision-maker. Carmona, who served as a High Court Judge before being appointed as President in 2013, expressed his frustration in Barbados during a presentation on Redefining Caribbean Pride for the 21st Century Youth, to University of the West Indies, Cave Hill Campus, undergraduate organization, Students Today Alumni Tomorrow. “Why have we yet not all subscribed to the jurisdiction of the Caribbean Court of Justice?” he asked President Carmona said he sees acceptance by all territories of CCJ to be the court of last resort as another step towards fortifying the Caribbean identity. “Perhaps the day will finally come when we can all take pride in, and responsibility for, defining, shaping, writing and ultimately, rewriting our own jurisprudence and laws in the context of our own peculiarities and the relationships among our own member states. The arguments for a common jurisprudence have been exhausted, but are not exhaustible.” CCJ judges are predominantly of Caribbean origin, and according to a CARICOM document, “judges appointed to the CCJ are evaluated on the basis of wide-ranging criteria that include experience, high moral character, intellectual and analytical ability, sound judgment, integrity and an understanding of people and society”. Carmona believes that with the majority of CARICOM nations yet to make that constitutional move towards replacement of the Privy Council with the CCJ for their citizens, creates a deficit “that mitigates against the spirit of the Caribbean integration movement”. “There have been many failed attempts at an integrated Caribbean in the past, with just a few making successful strides in this regard. Today, Caribbean societies are confronting even greater difficulties in treating with such issues as crime and security, health issues, and, of increasing importance, the danger posed by climate change. The need to pool resources has therefore never been more urgent. “There needs to be an embracing approach by all leaders. We must not be concerned about what we can get from each other but rather how we can help each other,” he said. (Barbados Today)
Global trade confidence returning – new survey
A regional official is upbeat over news that global business confidence is at its highest level in almost two years. Head of the Association of Chartered Certified Accountants (ACCA) for the Caribbean Orin Gordon said this should redound to the benefit of Barbados and other regional economies, which are tied to the United States. According to the latest Global Economic Conditions Survey, there has been a noticeable rebound in global trade, with the fastest rate of growth since the second quarter of 2015 achieved in the first quarter of this year. Gordon said that despite concerns about increasing costs, there were significant improvements for employment and investment, particularly among North American firms, with 22 per cent of firms planning to create more jobs and raise capital expenditure. This represents an increase over the last quarter of 2016. “The rise in confidence, combined with strong economic hard data, offers genuinely encouraging signs for the global economy. In particular, the US economy has maintained an elevated level of confidence from quarter four in 2016, with 37 per cent of firms felling more confident,” Gordon said in a statement issued last week. “An expectation of increased infrastructural spending and tax cuts has contributed to a buoyant business mood even though they are yet to materialize into policy. This is good news for the Caribbean which is highly depended on US economic growth,” he added. The latest quarterly survey, which is conducted by the ACCA and the Institute of Management Accountants (IMA), was carried out between February and March. It attracted 1,334 respondents from ACCA and IMA members around the world, including more than 150 chief financial officers. Gordon said policymakers would have an important role in the coming months to ensure sustained growth. “This quarter demonstrates there are signs that the global economy is returning to a degree of health after some very tough years. The International Monetary Fund is expecting global growth of 3.4 per cent this year, the fastest rate of growth since 2012,” he pointed out. “In this period of fragile recovery, a number of policy interventions could have a significant impact. The new US administration has yet followed through on its tough campaign rhetoric on trade. If and when it does, the picture and the mood will change significantly,” he cautioned, adding that the United Kingdom’s recent decision to leave the European Union has resulted in a slide in the value of the pound sterling. “How policymakers respond to this uncertainty and growing inflationary pressures will be crucial over the coming months,” cautioned Gordon. Article compliments Barbados Today.