Europe Should Stop Bashing Barbados Says Finance Minister Toppin.

Photo: Barbados Information Service. International trade minister Ronald Coppin takes umbrage at the EU blacklisting of Barbados, which he says is doing its very best to comply with tax regulations, but needs more time.
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Minister of International Business and Industry, Ronald Toppin. (FP)

A pending move by the European Union (EU) to blacklist Barbados has been described as “heartless” by Minister of Industry and International Business, Ronald Toppin.

Speaking via zoom during the Barbados International Business Association’s launch of Global Business Week 2020, Minister Toppin said “barring a miraculous change of mind” it is expected that the EU will announce the listing on Tuesday, October 6.

He explained that the EU automatically blacklists jurisdictions which receive a Partially Compliant rating by the Organization for Economic Co-Operation and Development (OECD)’s Global Forum.

He said Barbados now finds itself in this position after a review of the period July 2015 to June 2018. Ratings range from Non-Compliant to Partially Compliant through to Largely Compliant to Compliant.

Addressing the EU’s blacklisting, Minister Toppin stressed: “It is an unthinkable act, and all the more so at a time when we, like so many other small developing countries, are trying to desperately cope with the ravages of COVID-19, a global pandemic that is wreaking havoc on our economy. Such threatened heartless action by the EU at this time would only serve to compound our problems and make a bad situation worse.”

However, he gave the assurance that his Ministry was doing everything it could, inclusive of providing progress reports to the OECD every two weeks from the Barbados Revenue Authority and the International Business Unit, to ensure that the island could at least secured a Largely Compliant rating in the shortest time possible.

“We expect that this collaboration with the OECD’s Global Forum will enable us to submit a request for a Supplementary Review by the beginning of December if not before and achieve our aim of being delisted from Annex 1 by February 2021,” he noted.

Outlining how the pending challenge originated, Mr. Toppin said: “…Coming out of the Global Forum’s 2015 report, Barbados was required to implement a number of changes in its framework between July 2015 and June 2018. This fell squarely under the remit of the last administration for action and implementation.

“However, the changes were not fully completed in the timeline stipulated when Barbados was reviewed for the July 2015 to June 2018 period by the Global Forum. We were given a Partially Compliant rating, falling short of at least the Largely Compliant rating, which would have been satisfactory.

“That review, which was concluded in March of this year, found that the necessary legislative amendments were, by then, in place, having been enacted by this administration last year.

“Barbados’ legislative framework was therefore found to be in order. However, this was not deemed to be enough to avert the Partially Compliant rating as it really should have been done by June 2018.”

He added that not enough time had passed between the revisions and amendments to the legislation, and when the Global Forum conducted the review for that agency to assess the effectiveness and enforcement of the regulation and legislation to determine the extent of compliance.

Minister Toppin said although deliberations were held with the EU, including with the Chair of the Code of Conduct Group, Chair of the Code of Conduct Group, Lyudmila Petkova, it was made clear that listing Barbados on Annex 1 will proceed and that the island’s request for a Supplementary Review would take place in February 2021 once approval was received.

“It is mind-boggling that the EU would even contemplate taking such drastic action at this time. Even with the OECD’s Partially Compliant rating Barbados has made great strides to step up from that rating.

“In correspondence from the EU’s Code of Conduct Group in July of this year, they acknowledged “the progress made in many areas since the last peer review and welcome the spirit of cooperation with which you (Barbados) are approaching this”,” he stated.

Furthermore, the European Bank for Reconstruction and Development, as well as the World Bank Group, had given Barbados until April 2021 and June 2021 respectively to collect the deficiencies and meet the Global Forum’s standard.

Bermuda and Barbados have committed to addressing EU concerns and have therefore been moved to a so-called grey list of countries still under EU scrutiny for their tax practices, the statement said, effectively giving them more time to be fully compliant.

The European Commission proposals also include reforms to end sweetheart tax deals following a series of investigations into arrangements between EU countries and firms including Amazon, Apple and Starbucks.

The original full list was: Andorra, Liechtenstein, Guernsey, Monaco, Mauritius, Liberia, Seychelles, Brunei, Hong Kong, Maldives, Cook Islands, Nauru, Niue, Marshall Islands, Vanuatu, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, Panama, St Vincent and the Grenadines, St Kitts and Nevis, Turks and Caicos, US Virgin Islands.

Barbados was initially removed from the list as it was moving to comply, but will now be reinstated as it did not pass all the compliance tests at the latest review.

But critics say the publication of the list risks being seen as an attempt to distract from the EU’s need to tackle its own issues with tax avoidance.

The EU is also looking to build on existing probes into the tax dealings of Apple in Ireland, Starbucks in the Netherlands and Amazon and Fiat in the Luxembourg.

“Corporate taxation in the EU needs radical reform,” Moscovici said as he unveiled the plan. “Member States need to pull together and everyone must pay their fair share.”

The Organisation for Economic Co-operation and Development (OECD) and the European Union (EU) started these reforms of the international tax system to close loopholes. These gaps allow corporations – in Africa, particularly mining and energy companies – to shift their profits to tax havens to avoid paying higher taxes in the countries where they actually make their money.

Recent surveys by the international research initiative More in Common, found that a significant majority of the population in the U.S., U.K., Germany, France, the Netherlands, Italy, and Poland think that corporate bailout funds should be reserved for actors that pay taxes.

The U.S. and the U.K. had the highest level of support for the idea, with 94 and 95 percent of the population respectively agreeing that companies should not be bailed out if they are not paying taxes in their home country. Even the lowest level of support recorded in the Netherlands reached 87 percent.

“These polling figures, from country after country, confirm the public’s great anger at the scale of corporate tax abuse by multinational companies, and the cost to public revenues,” said Rosa Pavanelli, General Secretary of Public Services International, a global trade union federation.

“This is a direct contributing factor to the shocking underfunding of our public services, which the COVID-19 pandemic has fully exposed. Policymakers must act urgently to stem these losses and support public services – and that starts with simply requiring tax transparency from these companies, many of which are now seeking access to public funds,” she said.

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