Barbados is facing the possibility of being blacklisted by the European Union (EU) in another week.
This, as the country is forced to wait until February 2021 to find out if it will be removed from the Organization for Economic Cooperation and Development (OECD) list of jurisdictions partially compliant with the exchange of tax information standard.
Making the disclosure on Wednesday, Minister of International Business Ronald Toppin cried shame
on the EU, saying its action was “heartless”.
However, he gave the assurance that steps were being taken to rid the country of the unfavourable “partially compliant” status, adding that work was constantly being done to make Barbados the jurisdiction of choice for all reputable investors.
“I want to assure you that we have done and are doing everything possible and beyond to ensure that we secure a rating of at least ‘largely compliant’ in the shortest possible time. To this end, we have been engaging with the OECD every two weeks, furnishing them with updated reports on our [the Barbados Revenue Authority and the International Business Unit] progress.
“We expect that this collaboration with the OECD Global Forum will enable us to submit a request for supplementary review by the beginning of December, if not before, and achieve our aim of being delisted from Annex 1 by February 2021,” Toppin told the launch of Global Business Week 2020 which was conducted via Zoom.
Describing the development as “mind-boggling”, Toppin said: “Even with the OECD’s partially compliant rating, Barbados has made great strides to step up from that rating. Indeed, in correspondence from the EU’s Code of Conduct Group in July of this year they acknowledge ‘the progress made in many areas since the last peer review, and welcomed the spirit of cooperation with which Barbados is approaching this’.”
“Further, the European Bank for Reconstruction and Minister of International Business Ronald Toppin Development and the World Bank Group have given Barbados until April 2021 and June 2021, respectively,
to correct the deficiencies and meet the Global Forum’s standard. Yet, as I already indicated, the European Union . . . is proposing to blacklist us shortly,” he added.
The International Business Minister said that based on communications he had received, “they expect this list to be announced by the European Union on October 6”.
“It is an unthinkable act, and all the more so at a time when we, like so many other small developing countries, are trying desperately to cope with the ravages of COVID-19, a global pandemic that is wreaking havoc on our economy. Such heartless action by the European Union at this time could only serve to compound our problems and make a bad situation worse,” he warned.
Barbados was required to implement a number of changes to its tax exchange framework between July 2015 and June 2018 in order to become fully compliant with the OECD’s Global Forum Standard on the exchange of tax information.
The changes did not take place in the stipulated time frame. Instead, the necessary legislative framework was put in place by December of 2019. This did not save the country from getting
a rating of “partially compliant” when the review was completed in March of this year for the July 2015 to June 2018 period.
Ratings include non-compliant, partially compliant, largely compliant and compliant, based on the approximately ten areas assessed.
Toppin said what compounded things for Barbados was the fact that “enough time had not passed between all the revisions and amendments to the legislation and the time of the review by the Global Forum”.
It was due to that partially compliant rating by the OECD that resulted in the EU blacklisting Barbados in May of this year.
“For the European Union, once a jurisdiction receives a partially complaint rating by the OECD, it will be automatically blacklisted by them even if, as in our case, it is just a question of observing us for a period of time to ensure we are effective in our regulation and enforcement of the legislative framework,” explained Toppin.
He said it was made clear that the blacklisting would go ahead, and it would only be when an approval of request for a supplementary review is done at the next meeting in February 2021 that the country would be removed from the list.
Calling on the global business sector to help defend Barbados’ reputation, Toppin said his intention was for the country to be known as “one of the best regulated jurisdictions globally, where we are not business prohibitive, but business facilitative and attracting businesses of substances only”.
He also issued a stern warning to companies who do not want to adhere to Barbados’ laws governing the sector.
“Let me say clearly here, that my Ministry intends to ensure the strictest adherence to the rules and regulations, and will have no hesitation whatsoever to sanction where necessary, as we have already done as recently as suspending a service provider for the month of September. We are too vulnerable not to ensure and enforce the highest standards,” the International Business Minister said.