Tax laws in two Caribbean countries below standard

“Barbados should review its laws to remove any impediments or uncertainties about its power to obtain information,” the report said.

PARIS, France,  – Barbados and Trinidad and Tobago are among four countries found to be found wanting when it comes to having adequate tax laws.

The Global Forum on Transparency and Exchange of Information for Tax purposes, hosted by the Organization for Economic Cooperation and Development (OECD), has issued reports indicating that the two countries, which are among the most developed in the Caribbean, the Seychelles and San Marino, fall short of the international standard. 

Barbados and Trinidad were among 10 studied, the others being Guernsey, Mauritius, Australia, Denmark, Ireland and Norway.

The Barbados report identified deficiencies in the country’s bilateral treaties and noted that the government has not yet signed new agreements with all jurisdictions wishing to do so.

The document further highlighted concern that “under the anti-money laundering law, transactional information is required to be maintained in Barbados banks only in relation with transactions above a certain threshold and the requirements to maintain records under banking legislation is unclear”.

The report recommended that Barbados ensure that banking information is available for all transactions, whatever the amount.

It also had other issues: that, in certain cases, Barbados does not exchange information on offshore banks, international business companies, etc. which are not covered by treaty benefits; Barbados cannot exchange bank information with a quarter of its treaty partners, for a variety of reasons; legislation does not ensure that reliable accounting records or underlying documentation are kept for all partnerships and trusts; trustees of international trusts and registered unit trusts are prohibited from disclosing the name of any beneficiary or any account information; and secrecy provisions may also limit the Barbadian authorities’ access to information on some trusts.

“Barbados should review its laws to remove any impediments or uncertainties about its power to obtain information,” the report said.

Trinidad and Tobago missing key agreements

The document on Trinidad and Tobago notes that, while the twin-island republic is party to a number of bilateral treaties and a multilateral convention, the country has only one agreement that appears to provide for effective exchange of information.

There is legal provision to grant tax authorities the power to obtain information for its exchange of information partners in cases where it is not required for its own tax purposes, the report noted, but this requires the issuance of a Presidential Order to have effect. Such an order, it said, has only been made in the case of one of the 24 exchange of information agreements that are in force.

Additionally, taxpayers must first be approached and notified in order for their bank account information to be accessed and it was argued that this could unduly prevent or delay the effective exchange of information in urgent cases.

“It is recommended that certain exceptions from prior notification be permitted, for example, in cases in which the information requested is of a very urgent nature or the notification is likely to undermine the chance of the success of the investigation conducted by the requesting jurisdiction,” the report said.

One of the other concerns is that companies that are incorporated outside Trinidad and Tobago but have the central management and control in the twin-island republic are not required to provide information identifying their owners as part of registration requirements. Foreign companies are also not required to compulsorily keep a share register in Trinidad and Tobago.

The implementation of the recommendations made to both Trinidad and Tobago and Barbados in the separate reports will be reviewed in the next 12 months before either country is considered for the next phase of evaluation.

The Global Forum has been mandated by the G-20 to assist specific jurisdictions, as well as the international community, to assess the status of national tax legislation, examine whether the laws are enforced, and make recommendations for improvement. The reports evaluate jurisdictions' commitment to tax transparency and examine whether information is made available and accessible to foreign tax authorities.