By: Staff Writer
July 2, 2021
A top Central Banker in the region said that Caribbean economies “will make adjustments” to the global corporate tax rate proffered by the G-20 countries, being on a tax avoidance list is “not attractive.”
John Rolle, governor of the Central Bank of The Bahamas (CBOB), speaking on a Bloomberg webinar, “The Path to Recovery in the Caribbean,” on Wednesday, said in response to the question of Caribbean economies dealing with the imposition of a minimum global corporate tax rate: “I think economies in the region will make adjustments as appropriate.
“This is an issue that would have the greater impact on how we promote and supply international financial services.
He added: “Notwithstanding that, I think for countries like the Bahamas, it’s not attractive on any level to be confronting any sort of scrutiny of your tax regime ahead of the timeline that would line up with institutional and other changes.”
Last month the grouping of 20 mainly developed countries, the “G-20,” agreed to a framework that would introduce a global corporate tax rate minimum. However, no specific rate was mentioned in their discussions, opting to have the rate setting take place at an inclusive meeting of 140 countries on how the rate should be set sometime next week.
In the grouping’s draft, it said: “After many years of discussions and building on the progress made last year, we have achieved an historical agreement on a new, fair and stable international tax architecture.”
Mr Rolle also said: “But whenever we do look at our tax policies, I believe that the greater focus will have to be on how the tax policy changes and impact the kind of fiscal balance to repair that we need in our in our countries.
“Some of those conversations are already happening in the Bahamas and it is not often a comfortable one. But it is happening with a focus on the domestic context. It will happen and it has been happening as well as international services for supplies; and there I expect we will continue to look at how we manage the need to be cooperative in a global context, but also to find the competitive channels to grow and continue to remain in the international style of services.”
Therese Turner-Jones, general manager, Country Department Caribbean Group, Inter-American Development Bank, also speaking on the same webcast, agreeing with Mr Rolle that there will have to be adjustments in the financial services sector.
She added: “This scrutiny by the OECD (Organisation for Economic Co-operation and Development) countries on low income tax environments, has always been an issue vis a vis the OECD countries so that threat is always hovering over the international financial services sector.”
The OECD has caused to be blacklisted many Caribbean jurisdictions in the past. In addition, they have also done so in what financial services stakeholders in Caribbean jurisdictions have called “arbitrary,” while simultaneously moving the goal post on what the new standards of reporting are and the requirements for those standards.
Ms Turner-Jones added, however that the Basel three committee compliance and the volumes of regulations around AML CFT and anti-money laundering and counterterrorism financing need to be taken seriously and in the context of a wider tax convergence by the large developed countries. Adding: “That’s something that every single central bank across the world has been having to deal with since the early to mid-2000’s.”