Breaking News: Canadian Government Targets Barbados Offshore Banking

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).

12 Comments

Filed under Barbados, Business & Banking, Offshore Investments, Politics & Corruption

12 responses to “Breaking News: Canadian Government Targets Barbados Offshore Banking

  1. Pat

    As a tax paying Canadian, I say it is about time that everyone pays their fair share. If they were paying equivalent taxes in Barbados, I would have no bone to pick, but they are not. Some entities pay none/very little here and none/very little there.

  2. honeybee

    I am wondering whether Barbadians benefit from having secret accounts offshore and not paying taxes in Barbados or anywhere else. If so, shouldn’t the Barbados govermnent also want a reciprocal arrangement to gain access to this information? I think this would be the perfect opportunity.

  3. reality check

    people and investors are use to explaining how there money was earned and where it is being invested or transferred to. This is a normal every day occcurrence from so called tax havens.

    How is it that numerous politicians who apparently make less than $75.000-100,000 US per year, even with all their expenses paid, can earn enough money to buy very expensive properties without explanation to the public.

    It seems that the secrecy laws in Barbados, such as knowing all the shareholders of a company including beneficial ownership as well as a legal system that permits no transparency ( ie govt documents constantly unavailable to the public or land transfers unregistered for years ) protects those not playing by the rules at the expense of those who regularly do so.

    Full transparency and detailed and enforced integrity legislation is the issue for this island. Unless the public at every level demands it of its leaders, Barbados will continue down its slippery slope to inevitable devaluation and/or massive increases in taxes.

  4. Hants

    Barbados depends on offshore business and I hope the Rich Conservative supporters in Canada put the heat on the Finance minister to stop this vendetta PM Harper has against former Liberal PM Paul Martin.

    Canadians should remember that they have operated profitable Banks in Barbados for the last 40 years.

    Remember when there was only Royal,Scotia, CIBC and Barclays of England ?

    Remember all the projects that Barbados paid Canada to build. The Airport is one example.

    There was a time when Canadians enjoyed 10 years tax free to build profitable hotels.Some made millions from the sale of those hotels.

    If the Canadian Government feel they must terminate this tax agreement with Barbados I hope they have the decency to phase it over a 5 year period.

    Barbados has been a good Business partner with Canada and I hope this continues.

    I am a Canadian citizen but a born Bajan first.

    I hope Owen Arthur will invite PM Harper to Barbados. Harper was not a “traveller” before he became PM so here is an opportunity to introduce him to Barbados.
    Show him the “Canadian”Terazzo floors at Grantley Adams Airport which was designed and built by Canadian Architects,Engineers and even carpenters with money borrowed from Canada.

  5. Rumplestilskin

    Unfortunately, the writing is on the wall for the small island states.

    We getting too much money from too many places and the ‘big boys’ want their share.

    This is similar to the OECD attack a few years back.

    They dont see why we should have this huge amount of investment.

    But yet, their companies are now outsourcing everything but the kitchen sink to Asia.

    THAT is far more damaging to their economy, as the expertise in India, Taiwan, China etc will grow and USA, UK lose their advantage in expertise. Similar to the automobile industry.

    Let the countries in Asia get the expertise and only a matter of time before the student becomes the master.

    Serve dem rite deng.

    I say we use our vote in UN etc wisely…dont just side with anyone for the sake of it.

    Ya wanna be my fren? Okay, but da vote gonna cost.

    Play the same ballgame they wanna play. We only small, we gonna get licks, but we already getting licks.

  6. Hants

    ”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.

    The above will make Canadian companies shut down their Offshore operations in Barbados.

    Lets hope they don’t do this before the next elections in Canada.

  7. Roamer

    As an employee in the offshore section in Barbados, I know this is not something we should take lightly. These tax dollars contribute so much to the economy of Barbados, even though the rate is very low. The last theory was some 60% of the taxes paid. Think about the taxi drivers, the hotel workers, the restaurant workers, and don’t forget the many accountants and lawyers that would be out of work should this industry die.

  8. Hants

    Roamer the reason I posted about this is because the Canadian Government has been relentless in attacking Tax havens and Barbados got particular attention during the last elections.

    The former Prime Minister has his family Business registered in Barbados and the were attacking him during the campaign.

    I thought this would go away after the Conservatives won but they have been trying to plug so called “Tax loopholes.”

    I sincerely hope that Owen Arthur has the Political clout to change the Canadian government’s intentions. He needs to point out to the Canadian Government the years of goodwill and association with Canada.

  9. Pat

    Hants, if you think Harper would listen to Owen, think again. The man is in a world of his own. He does not even listen to us Canadians. Of course, if Owen changes his name to a bush, then maybe he will have a chance.

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