AML / CFT: Barbados Gov unhappy that it remains high on OECD tax list

Barbados has been notified that Her Majesty's Revenue and Customs will promote Barbados to Category 2 status when a revised UK Statutory Instrument is made in a few months' time.

According to a statement issued by the Barbados government on 6 May 2011, this "significant upgrade" of Barbados from Category 3 status was a direct result of its 2011 Income Tax (Exchange of Information) Regulations which provides for the unilateral exchange of tax information according to the 2008 OECD standard with Barbados' new and existing tax treaty partners, including the UK, who are now unable to exchange tax information consistent with international standards.

The British Government has also signalled its support for a revised OECD Global Forum Phase I report on Barbados' transparency and tax information exchange credentials based on the 2011 regulations noting that "there is a strong case for a supplementary report to be presented [by Barbados] to the Peer Review Group of the Global Forum on the Transparency and Exchange of Information for Tax Purposes as soon as possible."

"This swift and decisive response by the British Government is most welcome, and underscores the long history of tax cooperation our countries have enjoyed since 1970 when the Barbados-UK tax treaty came into force," said Prime Minister Freundel Stuart.

The Prime Minister noted that like the OECD Global Forum, Barbados believes information exchange should be grounded in the provisions of a bilateral agreement and is pleased that during the week of May 16, this year, a protocol to our tax treaty with the UK will be negotiated to update, among other things, the existing provision on exchange of information.

"Barbados has already informed the OECD Global Forum of the 2011 Income Tax Regulations and our intention to request a supplementary report on our legal and regulatory transparency and tax information exchange regime based on these regulations once the Forum adopts its draft revised methodology to provide for supplementary reporting," said Prime Minister Stuart.

The Prime Minister reiterated his Government's disappointment with the Global Forum's Phase I findings noting the highly prejudicial consequences of the PRG's determination that Barbados was not eligible for advancement to a Phase II evaluation. "The assessment was particularly egregious given that the OECD itself has since 2002 endorsed Barbados as a transparent jurisdiction that has never relied on secrecy to attract investment. A policy demonstrated by our long history of codifying international transparency and information exchange norms through our aggressive and longstanding policy of tax treaty negotiation. This settled policy again received endorsement in 2009 by the G-20 and the OECD when Barbados found itself the only independent Caribbean country on their "white-list" of jurisdictions found to be in substantial compliance with international standard on transparency and tax information exchange. Indeed, this explains the currency of our standing despite the Phase I conclusion", stated Prime Minister Stuart.