Disclaimer: The views and opinions expressed by this author are their own and do not represent the official position of the Barbados Today.
by Donna Every
A couple of weeks ago the Corporate Secretary for one of our companies emailed to ask me to provide information to comply with the Companies (Economic Substance) Act 2019. I had to say if our company was managed and controlled in Barbados (i.e. resident) for tax purposes; if it was conducting a relevant activity of which there was a list and I had to show that it met the Economic Substance test by answering a number of other questions to prove that we have a real presence in Barbados.
Every time you deposit more than $10, 000 in the bank, you have to complete a Source of Funds Declaration form stating, as the name suggests, the source of the money you are depositing, ostensibly to prevent money laundering or tax evasion.
From the 2019 income year, our corporation tax rate has been reduced to 5.5 per cent, and this is reduced further based on taxable income in excess of $1,000,000. This was put in place to “create a new, stable, OECD-compliant low-tax regime for all companies” according to the Throne Speech.
However, the news hit last week that we are still being blacklisted by the EU for failing to comply with the requirements of the OECD on a timely basis. First of all, I have an issue with the term “blacklist”, especially since “whitelist”, according to the Merriam-Webster dictionary, is a list of favored or approved items. (If you ever watched the Mohammed Ali interview about black and white, you will know what I mean). Perhaps this “blacklisting” is indicative of the current state of the world and the issues that are being revealed.
It is ludicrous when you compare the size of the Barbados economy, which is a tiny drop in the ocean, to European economies such as Germany ($3.8 trillion), France ($2.7 trillion) and Italy ($2.0 trillion) in 2019. Why would such a monstrous trading bloc seek to put further pressure on the already fragile Barbados economy?
It is not as if revenue that we derive from our international business sector would have a significant impact on their economies, but I am not an economist, so I don’t understand all the implications behind their actions.
However, I can’t help but be reminded of the 1651 Navigation Act and subsequent Acts, which were introduced by England in order to tighten the government’s control over trade between England, its colonies, and the rest of the world. Has the EU now taken that position? And therefore, have we really left our colonial past behind?
This leads me to look again at the whole idea of sovereignty. The Throne speech, which must be the most talked about one in recent history, states: “The time has come to fully leave our colonial past behind. Barbadians want a Barbadian Head of State. This is the ultimate statement of confidence in who we are and what we are capable of achieving. Hence, Barbados will take the next logical step toward full sovereignty and become a Republic by the time we celebrate our 55th Anniversary.”
Based on the position we now find ourselves in, the suggestion that we must take “the next logical step toward full sovereignty” is ironic.
The threat of blacklisting (or remaining blacklisted) was enough for us to rush and pass the Companies (Economic Substance) Act 2019 and to make changes to our corporation
Meanwhile, if I want to, I can set up a company in Delaware in a day and never set foot in Delaware. Where is the requirement for economic substance from the US?
It is feared that this blacklisting will cause us to lose potential foreign investment and may cause banks to be forced to impose various restrictions.
While this is concerning, it is also an opportune time for entrepreneurs and business professionals to begin to more actively look at exporting their services and earning foreign exchange. Businesses should also begin to look at using non-traditional web-based financial companies, such as TransferWise, to enable them to operate globally and to be unaffected if the banks (all of which are foreign owned) find themselves under pressure from the international community to impose further restrictions.
As the government prepares to make unprecedented changes to the laws in Barbados in response to its claims that “we cannot allow the country to be ‘blacklisted’ for human and civil rights abuses”, consideration should be given to the fact that even after doing everything that our colonial masters have asked of us, we still remain on the blacklist.
Therefore, more thought needs to be given to which master Barbados will choose to serve with the laws that are being considered, for we cannot serve two masters. Should we choose the one who has been faithful or one who has not? May we choose well.
Donna Every is an author, international speaker, and trainer. Visit her website at www.donnaevery.com or email her at [email protected]
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