As published on barbadostoday.bb, Wednesday 7 September, 2022.
Barbados and other Caribbean Community (CARICOM) member states are being warned of the need to adapt new corporation tax rules in order to protect their tax base in light of new global changes.
This caution has come from Secretary General of the CARICOM Secretariat Dr Carla Barnett, as she addressed the second Distinguished Owen S. Arthur Memorial Lecture at the Errol Barrow Centre for Creative Imagination on Monday on the topic The Future of CARICOM: Charting a Vision for the Region’s Economic Advancement.
Barnett said the time had come for the region to review its double taxation regime and prepare to put new corporation tax rules in place in light of the changing global requirements.
“Alongside the initiative to modernise and further develop the CARICOM financial sector and the common investment space, is the reality of the evolving global tax governance agenda and financial regulatory architecture,” she said.
“The intra-CARICOM double taxation agreement which predated the revised treaty has been deemed to be non-compliant with member states commitments in respect to the global tax governance agenda which now emphasises exchange of tax information and tax reform to prevent evasion and avoidance, especially given the challenges emanating from the digitalisation of the global economy
“We therefore have to review our double taxation treaty as well as prepare for the adoption of new rules on corporation tax to protect our tax bases,” said Barnett.
Barbados and other CARICOM member states are facing the possibility of the Organisation for Economic Cooperation and Development’s (OECD) two-pillar tax rule, which is being touted as a solution to address tax challenges arising from digitalisation of economies. Pillar two proposes a 15 per cent minimum global tax rate by 2023.
According to the OECD, its minimum global tax plan is designed to “reform the international taxation rules” and ensure that multinational enterprises pay a fair share of tax wherever they operate.
“Addressing this particular challenge requires not only specialised technical services but also vigilance and a concerted programme of advocacy to take into account the special needs of small states in the design for rules for corporation tax systems being spearheaded by the OECD,” said Barnett.
During her wide-ranging presentation on the future of CARICOM, Barnett also outlined several areas where she said work was progressing including the development of a regional regulatory framework to make the region a single economic space, a regional reporting system, air and maritime transport, and the free movement process, which she said has already resulted in the removal of hundreds of restrictions on the movement of goods across the region.
“CARICOM ministers of finance are also considering a policy for the development and regulation of the regional securities market as a step towards creating an integrated capital market,” she added.
She warned that as countries deal with the long-standing challenges, they must make haste to try and address the newer issues that are already ”shaping the future of our economies and societies”.
“As we accelerate the push for growth we must do so with inclusiveness, fairness and respect for the rights and dignity of all CARICOM citizens at all times and without exception,” said Barnett.
“As we put our house in order and take bold, even disruptive steps to pursue the integration goals that will foster growth and development, we must seize the moment to engage externally to the dynamism that is driving the internal agenda. We must adapt our external trade and economic strategy to embrace new opportunities in south-south cooperation. We must look for partnerships that embrace the future, building on those that have been long established,” she added.
Barnett said it was in that context that she saw the recent AfriCaribbean Trade and Investment Forum as a timely and promising start to a new stage in the relationship between the Caribbean and Africa.