Minority Government Introduces Motion To Tax Offshore Profits
The “War On Terror” has put pressure on Barbados and other offshore financial centres to be more open with foreign governments in the exchange of information respecting offshore monies. The USA, Canada, Britain and other large trading partners have demanded that Barbados surrender some of the secrecy and privacy that has characterized offshore banking.
The fallout from this information exchange is that foreign governments such as Canada and the United States are now in a position to threaten the very existence of our offshore financial sector. After all, why should a resident of Canada or the United States do major financial business in Barbados except for privacy and tax avoidance (whether legal or not legal in their own country).
Make no mistake – this latest Canadian move is a direct threat to the profitability of Barbados as an international financial centre. This will not be the last assault upon our financial sector either.
Perhaps the government of Barbados has some plans to counter the move by the Canadian government – or perhaps not… but when foreign governments come looking for the financial records of ordinary citizens, Barbados had better think twice before giving them up.
Every time the Barbados government or banks allow foreign governments to access our information, it weakens a very important pillar of our island economy.
From the Montreal Gazzette…
Conservatives Target Offshore Tax Havens
OTTAWA – The Conservative government, having just shut down one costly tax avoidance scheme, income trusts, now has another in its sights, offshore tax havens.
”There’s some significant tax avoidance there,” Finance Minister Jim Flaherty said, after revealing to the Commons finance committee that the government is reviewing the use of offshore tax havens to avoid paying tax.
Using offshore tax havens to avoid tax, just as corporations were using income trusts to do so, is not illegal but is costly to the government, he said.
Last year, Statistics Canada revealed Canadian direct investment in offshore financial centres, including ”tax havens,” had soared eight-fold since 1990 to $88 billion in 2003.
”Canadian enterprises invested substantial and growing amounts in countries known as ‘Offshore Financial Centres’, many of them in the Caribbean,” it said. ”These centres include countries that are often referred to as ‘tax havens’, as well as those which have important financial sectors, such as Switzerland, but also Ireland,” it said.
The largest increases went into Barbados, Bermuda, the Cayman Islands, the Bahamas and Ireland, the five countries being among the 11 nations with the most Canadian assets.
Auditor General Sheila Fraser has charged that multinational companies operating in Canada have avoided ”hundreds of millions” of dollars in taxes over the past decade through the use of tax havens, while one university study put the tax savings to Canadian banks alone at $10 billion over that period.
Flaherty later introduced a motion in the Commons to amend the Income Tax Act to prevent ”non-resident trusts and foreign investment entities” from using offshore tax havens to avoid tax.
”The motion will amend existing income tax rules to help ensure that income earned by Canadians through foreign jurisdictions, including tax havens, is subject to tax as if it had been earned in Canada,” he said in introducing the motion.
… read the rest of the Monteal Gazette article (link here).