by Roland Jones, CEO & Managing Director, The Axebridge Group
Base Erosion and Profit Shifting, the Common Reporting Standard, the Panama Papers, the Tax Justice Network…as the transparency argument gets louder, it appears that opponents of the basic human right for confidentiality continue to increase. So how does Barbados’ international business industry continue to evolve in this new world?
Looking back at the development of the industry over the years, it is evident that Barbados is not, and never has been, a ‘zero-tax’ jurisdiction. Barbados has a complex and comprehensive system of tax for its citizens and high-skilled expatriates. In addition, there has been heavy investment in a network of double taxation (DTAs) and bilateral investment treaties (BITs).
One of Barbados’ finest achievements is its investment in educating its workforce. The country is home to experienced, highly-skilled and educated professionals, most of whom have achieved postgraduate certification in their various fields.
But what does all this mean for the future, and how will Barbados continue to advance?
With the level of transparency now demanded in this new world, tax will not be the determining factor in a corporation’s or family’s decision to move their business interests offshore. For corporates, the decision to move to an international jurisdiction will be less influenced by tax, and more so by other efficiencies, including legislation, ease of doing business, flexibility and overall costs. There will also be more emphasis on substance and mind and management. Directors, administrators, local corporate staff, professionals and other stakeholders will need to understand the business of the offshore entity and where it fits in the value chain – and this has long been the norm in Barbados. Gone are the days when an administrator might sign off resolutions at the instruction of a foreign originating email, a common practice in some other jurisdictions.
For families, similar factors will influence their decision, with the added need for quality of life – especially stability and safety, certainty of law and the ability to find skilled and experienced professionals who can provide a range of services. Whilst there is a need for sensitivity in regard to confidentiality, there is also still the need for asset protection and family estate planning, which Barbados’ considerable and competent support services are well able to supply.
Barbados will continue to evolve in the future by:
- ongoing negotiation and conclusion of DTAs, perhaps with the focus on creating benefits that allow businesses to thrive in a global market
- expanding the BIT network. The world is a scary place – investors need assurances that their funds and operations will be safe
- improving the ease of doing business. Consider technology to improve the process. Corporates and families alike want flexibility and convenience (can we remember what we did before online banking?) Incorporation and dissolution of companies, director and address registers, certificates of good standing and other straightforward tasks should be achievable with the touch of a button
- improving our laws and the speed at which legislation comes into practice. We all have clients knocking at our doors for foundations and private trust companies, among other solutions
- continuing to improve Barbados’ infrastructure
- providing more funding and support for the international business sector. The sector provides many opportunities, both in promoting career paths and enabling our entrepreneurs to access global markets and networks
- continuing to invest and expand in Barbados’ tourist industry. Whilst pristine beaches and clear turquoise waters are also available in other parts of the world, sometimes at a lower cost, these factors enhance the overall value of the Barbados product for both families and corporate.
Barbados has built its international business on a strong foundation and is well positioned for the new era. There are undoubtedly some challenges with increasing transparency requirements internationally, but there are also many opportunities.