Canadian Parliament to re-examine Barbados ‘tax-haven’

Barbados has no Integrity Legislation, no Freedom of Information, no Conflicts of Interest Rules

We stumbled upon an article in yesterday’s Nation that proves all old can be new again. It must have been a slow day in the news room because the news article TAX ATTACK is based on a blog entry from last August and is marketed as new news.

We don’t doubt that much of the Canadian doubts about Barbados and other “Tax Havens” has to do with our lack of proper regulations and laws respecting Integrity Legislation, Freedom of Information and Conflicts of Interest. How can the Canadian Government protect its citizens if offshore banking centres like Barbados do not have the same controls, rules and oversight as Canadian banks?

There is no secret why Canadian and other nation’s banks like Barbados: our “island time” slackness extends to the rules. The Canadian and European banks can get away with things in Barbados that they wouldn’t dare do ‘over ‘home. Canadian tax law permits money to flow through Barbados in many billions – but without any concommitant requirement for ITAL. (ITAL = Integrity, Transparency and Accountability Legislation)

ITAL was promised five years ago by the newly elected DLP government – but they lied.

Here’s a quote from the real story at the original blog source and the link where you can read it for yourself. How does this impact Barbados? That’s easy: tourism is in trouble and if Canada makes offshore investing difficult for Canadians, you just watch how things go ’bout hey!

“A growing share of Canada’s investment overseas is being channeled by Canadian banks into tax havens.”

“The finance and insurance sector now accounts for over 51% of Canada’s total direct investment overseas, more than double its share from 1987, more evidence that a large share of this money is going overseas to avoid taxes.   The Harper government has lauded Canada’s growing investment overseas, claiming it shows looser foreign investment rules (which allowed numerous takeovers of Canadian industry) have been beneficial, but the actual figures show the reality is quite different.  A large and growing share of this money isn’t going into real capital investments that could ultimately benefit people overseas or in Canada; it’s going into tax avoidance that benefits a wealthy few at the expense of the large majority in Canada and around the world.”

… from the August 16, 2012 Progressive Economics blog by Toby Sanger: Canadian banks use of tax havens keeps growing

7 Comments

Filed under Barbados, Business & Banking, Economy, Offshore Investments

7 responses to “Canadian Parliament to re-examine Barbados ‘tax-haven’

  1. St George's Dragon

    At some point there is going to be a worldwide shake-up on international tax. What used to be a debate about “tax havens” is going to become a debate about fairness.

    Tax havens were about dodgy deals and secrecy. Barbados scraped through that mess and is now seen as a low tax country.

    Recently, though, there have been a number of big news stories in 1st world countries about large companies turning over huge amounts of money in those countries but paying little or no tax. As an example look at Vodafone, a big cellphone company worldwide and in the UK. The UK arm of Vodafone took a big loan from the Luxembourg arm of the company and offsets the interest against its UK corporation tax bill. The interest effectively negates the UK tax bill and the tax paid in Luxembourg is virtually nil.

    UK taxpayers are saying that this unfair for such a huge UK business..

    Are they right? Maybe. Is the company doing anything illegal? Possibly not.

    Now Barbados makes money out of lots of off-shore companies that wash their money through here quite legitimately. We, of course, welcome the foreign currency and the tax we make.

    Turn it round the other way (and this is just fiction as I use them as a hypothetical example) but take a big Trini owned company like ANSA McAL. A huge employer in Barbados. If we found out that they were paying little or no tax in Barbados on profits from McEnearney, Carib, Brydens, Stokes & Bynoe, Consolidated Finance and all the rest, we would be scandalised.

    So is it ok for us to be a low tax country for the Canadians but not for the Trinis to do the same to us?

  2. Konkieman

    Vodafone ain’t de only one in the UK, big corps like Starbucks, Staples, etc doing the same thing. Now governments becoming revenue strapped, look for de tax loopholes to close like a black hole in space.

    This will dry up the tax advantage Bim and others have overnight. And I am sure govt ain’t ready for it!

  3. 249

    Government is the biggest thief of all. It is the most incompetent service and goods supplier and all because their employees cannot be terminated when they perform at a daily sub-standard level. Government is unaccountable for the most part and it is this that makes it what it is.

  4. Anonymous42

    http://m.thetyee.ca/Opinion/2012/11/05/Tax-Cheaters/
    “Toby Sanger, senior economist with CUPE, crunched the Statistics Canada numbers and found that more and more Canadian investment is going offshore to avoid taxes: it was 10 per cent in 1987 and 24 per cent in 2011. According to Sanger’s analysis, Barbados alone has seen its secret Canadian accounts grow 60 per cent in the four years up to 2011 — from $33.4 billion in 2007 to $53.3 billion. The Cayman Islands squirrels away $25.8 billion, Ireland over $23 billion and Bermuda and Luxembourg (up 318 per cent), $13 billion each.”

    “Our wealthy citizens — corporate and otherwise — using these secret accounts are in fine company. The UN Office of Drugs and Crime says more than US$1.5 trillion of criminal money is laundered yearly through these same tax havens.”

  5. The OECD states “Barbados will not be included in the list (of tax havens) because it has longstanding information exchange arrangements with other countries. Barbados is also willing to enter into tax information exchange arrangements with those OECD Member countries with which it currently does not have such arrangements. Barbados has in place established procedures with respect to transparency. Moreover, recent legislative changes made by Barbados have enhanced the transparency of its tax and regulatory rules.”

    Also, a study titled “Offshore Financial Centers and the Canadian Economy” by Professor Walid Hejazi from the Rotman School of Management, University of Toronto in 2007 states “Barbados’ level of transparency and information sharing does not allow for individuals and companies to use that jurisdiction to evade taxes.” – http://www-2.rotman.utoronto.ca/facbios/file/Hejazi%20Barbados%20Study%20Rotman%20Website.pdf

    While Barbados sadly does not have Integrity, Transparency and Accountability Legislation setup for local MPs, these measures are in place in the international business sector and are extremely stringent, more so than countries such as Britain and the US as noted below:

    Professor Jason Sharman of Griffith University, Australia, a specialist in the role of offshore financial centres contacted 3,000 corporate service providers in both offshore and onshore jurisdictions to set up a “shell” company and test their compliance with the Financial Action Task Force’s Anti-Money Laundering regulations. His findings were very revealing: “OECD countries do a much worse job of collecting information on the prospective owners of ‘shell’ companies than their counterparts in offshore financial centres.”

  6. legal avoidance not evasion

    Professional semantics and obfuscation

    Here is the net effect

    http://taxreference.wordpress.com/

  7. Mac

    I find it ironic that in the same week, it is announced that American Overseas rinsurance Company is relocating from The Bahamas to Barbados. Is Pres Obama’s pledge to stop US companies avoiding taxes in off shore accounts getting to hot for them, no such issue here. Will we see Mitt Romney around here soon too?