Good Morning.
My name is Ben Arrindell. I am the chairman of the Barbados Private Sector Association, and I am also the Barbados representative on the United Nations committee of experts on international cooperation in tax matters.
I thank you for the opportunity to address you this morning. The purpose of my address is to attempt to provide some balance to the current debate on the issue of the abusive use of tax havens, and to correct the portrayal of Barbados as a tax haven.
There is no universal definition of a tax haven. Many people, countries, and international organizations have attempted to provide their own definitions. In the debates over the past two weeks, which I have followed, I have seen some suggestions to the effect that any country with a tax rate lower than Canada's is a tax haven. In my view, that is an extremely simplistic view of the matter, and I would suggest that this kind of interpretation is fraught with difficulties.
The OECD, in its initiative on harmful tax competition, back in 1999-2000, focused on four issues in attempting to define a tax haven: a lack of transparency in tax laws and regulation, a lack of exchange of information, a country that levies no taxes or nominal taxes, and a country that encourages businesses that lack substance. With that definition in mind, let me seek to talk specifically about Barbados.
The Barbados strategy for the development of international business and financial services is based on transparency, free and active exchange of information within the framework of a tax treaty, and a lack of bank secrecy and legal impediments in its domestic laws to the exchange of information. Based on its commitment to these factors, and taking into account Barbados' compliance with these factors, the OECD removed Barbados from the list of tax havens, without Barbados having to sign any commitments to the OECD.
Since the OECD initiative, and since Barbados was removed from that list, there has been a grey network of double taxation agreements that have been signed and concluded by Barbados with OECD member countries. I think this is an indication that such countries do not regard Barbados as a tax haven. The Netherlands and Austria are just two examples of countries that have signed full double-taxation agreements with Barbados.
The OECD talked about low taxes. I've seen a number of references to this in this debate. I should mention that this only applies to certain entities involved in certain activities. These are the activities that Barbados has targeted for future economic growth--for example, the international business and financial services. But we also have incentives to encourage tourism, manufacturing, and so on.
The provisional incentives to investors are not unusual, as many countries, both developed and developing, offer such incentives—and this includes Canada. In that respect, Barbados is no different from other countries. I should mention that Barbadians can also own the entities that are specially tax-privileged.
I turn now to the Canada-Barbados treaty relationship. There has been mention of the fact that apparently Barbados has changed its legislation since the treaty was introduced. That is not the case. The treaty was signed in 1980, and at that time Barbados had international business companies that were able to benefit from a low tax regime. A testament to this is the fact that IBCs are excluded from being able to benefit from the Canada-Barbados treaty, so they did exist at that time.
Finally, I'll just talk very quickly about the contribution to Barbados of the international business and financial services sector, in terms of its contribution to foreign currency earnings, government revenues, jobs, tourism, development of specialized skills and transfer of those skills to Barbadians, and development of technology.