Legal twist to info exchange
Barbados appears to be moving into full financial information-sharing mode as the world’s most powerful countries put their foot down on tax evasion.
It is already known that last November Government signed an Inter Governmental Agreement with the United States (US) to exchange information on their citizens who have thousands of dollars deposited in banks in both jurisdictions. The exchange is expected to start later this year. It does not end there. Barbados has also committed to exchanging similar information with the members of the Organisation for Economic Cooperation and Development’s (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes from 2017. However, BARBADOS BUSINESS AUTHORITY understands that Government might have to get parliamentary approval since the Global Forums’ new automatic exchange of information standard requires its “common reporting standard” to be “translated into domestic law” before any information exchanges take place. Global Forum officials said “before entering into a reciprocal agreement to exchange information automatically with another country, it is essential that the receiving country has the legal framework and administrative capacity and processes in place to ensure the confidentiality of the information received and that such information is only used for the purposes specified”. In addition to Barbados, other regional countries committed to their first information exchange by 2017 included Trinidad and Tobago, Turks and Caicos Islands, Curacao, Anguilla, British Virgin Islands, Bermuda, Cayman Islands. According to the commitment Barbados has made, “the financial information to be reported with respect to reportable accounts includes all types of investment income (including interest, dividends, income from certain insurance contracts and other similar types of income) but also account balances and sales proceeds from financial assets”. Also, “the financial institutions that are required to report under the [common reporting standard] do not only include banks and custodians but also other financial institutions such as brokers, certain collective investment vehicles and certain insurance companies”. Reportable accounts include “accounts held by individuals and entities (which includes trusts and foundations), and the standard includes a requirement to look through passive entities to report on the individuals that ultimately control these entities”. The OECD said this latest move was part of efforts to stamp out international tax evasion. “As the world becomes increasingly globalised it is becoming easier for all taxpayers to make, hold and manage investments through financial institutions outside of their country of residence. Vast amounts of money are kept offshore and go untaxed to the extent that taxpayers fail to comply with tax obligations in their home jurisdiction,” it said. “Offshore tax evasion is a serious problem for jurisdictions all over the world, OECD and non-OECD, small and large, developing and developed. Countries have a shared interest in maintaining the integrity of their tax systems. Cooperation between tax administrations is critical in the fight against tax evasion and in protecting the integrity of tax systems. A key aspect of that cooperation is exchange of information.” Under the new Global Forum standard Barbados has committed to, financial institutions providing information will include “custodial institutions, depository institutions, investment entities and specified insurance companies”.
