The real and projected economic and financial consequences of COVID-19 for the small island international financial centres were brought into sharp relief when, in the middle of March 2020 during the pandemic, Barbados received its message of listing from the European Union. Policymakers recognised and processed the message as the need not only to give direct response to the message but also to re-examine and reassert the integrity and maturity of the Barbados international business model; as well as to review and refocus Barbados' overall foreign policy model.
Barbados has had a long history of international business from as far back as the 18th century when it was the world's largest producer of sugar and rum. It has played an ongoing role as an attraction to visitors including its very special guest George Washington who conducted his only travel outside of the United States to Barbados. As a young man, he received the sought-after curative powers of the island's weather, and learnt the social graces which would help him in later life as an American President. The sojourn in Barbados constituted his only travel outside of America and is today appropriately recognised particularly in Barbados.
This mixture of travel and trade has long been expressed in Barbados' strategic use of double tax treaties which on the advent of its political independence in 1966 were subsequently supplemented by an array of speedily and carefully negotiated new treaties with new partners. The tax treaty and the bilateral investment treaty have defined Barbados as an international business and financial centre. For even though it has post 1966 introduced some financial services legislation with an emblem of zero tax, its legislation as a whole has, at the core, relied on the skilful use of its double tax treaties. Indeed, the seminal and now revoked international business company act started as a 1960s’ product geared towards the attraction of internationally mobile capital primarily from the United Kingdom at a time when the use of such a tax was efficacious and indeed also acceptable. That piece of legislation ebbed and flowed with disparate use and acceptance and while some treaty partners excluded it ab initio, others took it out of the tax relationship after successful mutual business use.
While the death of the international business company and the accelerated focus on substance legislation may be seen as a symbiotic occurrence, its reception among jurisdictions has been nuanced with some subtlety. For whereas all of the international financial centres have immediately introduced the requisite substance legislation, the pure zero tax jurisdiction has been able to accommodate new OECD/EU requirements with minimum disruption to existing structures. Barbados has aimed to build on a tradition of substance through not only its new substance focused legislation but also by way of a dedicated policy aimed at strengthening its processes, developing and expanding a business focused foreign policy, and refocusing critical pieces of the financial services architecture.
In this vein of refocusing, the Barbados Stock Exchange Inc. (BSE) announced that on December 2020 it had received regulatory approval for its inaugural listing of a Eurobond on the Exchange's International Securities Market (ISM). The listing was approved by the BSE's primary regulator, the Financial Services Commission (FSC). Essentially, the listing provides a significant opportunity for Barbados to offer a Eurobond structuring and listing service. The development of the BSE has been long and enduring with strategic non intensified expansion. At the core of this newly expanded focus is the ability from as early as the decade of the 1980 for the then new Exchange to admit a special category of "Exempt Securities".
The "Welcome Stamp" introduced at the start of the COVID-19 pandemic further highlights the referenced legislative development. For the jurisdiction has long introduced a Special Entry Permit for visitors based on local assets and certified wealth of the holder; itself a refinement of its Immigrant Status and Work Permit regimes long and successfully used by investors and long-stay visitors. The new regime seeks to capture the remote worker who does not necessarily wish to create a "Permanent Establishment" but to work remotely in a "safe" environment and not disrupt individual taxation and other regulatory elements in the home jurisdiction. Introduced in July 2020, though announced earlier, it represented the first digital nomad visa offering individuals and families the opportunity to live and work in Barbados for up to 12 months. Its popularity was instant and was immediately followed, albeit sometimes with variants, by other jurisdictions.
Among practitioners, expanded attention has been given to the more sophisticated uses of existing products such as the tax treaty in legitimate international tax planning as well as the trust in estate planning. With an established base in these two areas, and with the new challenges and opportunities in wealth management and preservation, the jurisdiction's seasoned professionals have been called upon to join with international colleagues in planning and structuring using Barbados as pinnacle, base or centre.
Naturally, such efforts must be complemented by smooth and efficient governmental structures which administer the necessary paper work and give support to the body of planning and placement. Barbados has had a long tradition in such governmental interventions and has been fortunate to have a cadre of skilled governmental professionals with the requisite sensitivity to the jurisdiction's overall developmental needs. However, the processes have not always matched the expectations of the two sets of users. In recognition of this need for structural revisions, the Barbados Government has budgeted BDS$18 million (US$9 million) for the current financial year to be allocated to the international business sector. A significant part of this expenditure will go towards technologies and improvements inclusive of an E-Commerce platform. In essence, the long awaited digitisation is on the way and should result in the presence and full use of an efficient electronic platform.
Complementing this proposed effort to upgrade the technology and to deepen the legislative process is Government's recent and stated intention to broaden the base of its international relations for wider economic and financial benefits. By way of explanation, Barbados, on its gaining of political independence in 1966, was quick to invoke a foreign policy which it first enunciated at the United Nations as one of being "friends of all and satellites of none". This posture remained consistently over the intervening years as the immutable plank of the country's foreign policy. While it may have served its stated objective, nevertheless, spurred on by COVID-19, the time was ripe for expansion of a foreign policy geared to broader economic and financial advantage. New representations have been announced for a new Barbadian presence in Ghana, Kenya and the United Arab Emirates and a refocused presence in China, Canada and at the United Nations in New York. It has been recognised that strategic use of the vast tax treaty as well as the bilateral investment treaty network may be more skilfully used in a COVID environment. It is a further recognition of the old dictum that the most effective foreign policy is an efficient extension of domestic policy.
Richard Ligon's "A True and Exact History of the Island of Barbados" was first published in 1657 and republished in 1673. It details the experience of an Englishman who fled to Barbados after the English civil war. Ligon worked as an Engineer on a sugar plantation in Barbados and his book represents a very perceptive early view of the systems and processes of the plantation culture and economy of an early Barbados. With a comprehensive and all-encompassing focus embracing people, government and the island's cultivated crops, he provides several vignettes. One such example is his encounter with a man he describes as the plantation's Chief Musician. In a very prescient examination, he explores the interaction of the musical fusion of the English and the African musical traditions; and the admixture of respective string and percussion instruments. It is not only a remarkable insight of explorative writing but also an inspirational backdrop of the power of collaboration and fusion as agents of development and change. It emotes enduring substance.
Sir Trevor Carmichael QC
Sir Trevor Carmichael, KA,LVO,QC. was born in Barbados and educated at Harrison College and the University of the West Indies, Mona, Jamaica. After pursuing post graduate studies in the United States, he was called to the United Kingdom Bar as a member of the Middle Temple in London and the Barbados Bar in December of 1977. He is a member of the International Bar Association, the Inter-American Bar Association and a Committee Member of the Inter-American Bar Foundation as well as an associate member of the Canadian Bar Association. He holds membership in the International Tax Planning Association, the International Fiscal Association and was one of the parties responsible for establishing a Barbados Chapter of the International Fiscal Association of which he is Charter President. He is the Barbados Country Chairman of the International Litigation Committee on Business Law of the International Bar Association and a former Deputy Secretary General of the International Bar Association. He is a Life Fellow of the Institute for Advanced Legal Studies in the United Kingdom, a Life Member of the Commonwealth Magistrates and Judges Association and a member of the International Law Association.