There are no plans to change the corporate tax rate
Multinational corporations in Barbados are assured that the government has no intention of adjusting the current tax rate between 1 and 5.5%, as fears continue to grow over the threshold of impending global minimum taxation of 15%.
Noting that some companies were considering leaving Barbados, Kevin Hunte, director of international affairs at the Department of Energy and Business Development, said the government was hiring officials at the Organization for Economic Co-operation and Development ( OECD). for more details on the expected overall minimum tax rate.
“What I can tell you is that there are, at the moment, no plans . . . to change the current tax rate from the corporation tax of its sliding scale of 5 .5 percent to 1 percent to a general corporate tax of 15 percent. That’s not what’s being proposed,” Hunte told many attendees on day two of the corporate tax management conference. Risk and Insurance in Barbados at the Hilton Resort.
He further assured that a high-level team was “on the verge” of making certain recommendations to Prime Minister Mia Mottley, who is also Finance and Cabinet Minister, and once this is completed, industry operators world of business would be informed of these recommendations. proposals for the planned global minimum corporate tax rate of 15 per cent.
Hunte, responding to concerns expressed in another section of the press about the lack of speech on the issue during the recent budget presentation, said that in addition to Barbados, a number of other countries had various concerns. concerning different aspects of the two OECD agreements. pillar plan for the reform of international tax rules, to be implemented by 2023.
The first pillar of the planned reform concerns the development of a framework for taxing the digital economy and will reallocate the profits of large multinational companies, with global sales of 20 billion euros and a profit margin of 10% or more, from their country of origin to the jurisdiction of the market where their users and customers are located.
The second pillar is the introduction of the minimum overall corporate tax rate of 15% for companies with a turnover of more than €750 million, regardless of their registered office or place of business. This is designed to combat base erosion and profit shifting (BEPS).
Barbados has joined more than 130 other countries in signing on to new OECD tax rules which it says should ensure multinational companies pay what it considers a fair share of tax wherever they operate. operate.
Hunte told conference attendees he was aware that some entities were considering leaving because Barbados had not clarified its position on the overall minimum corporate tax rate.
However, indicating that there was uncertainty on a global scale, Hunte said: “We won’t be rushing to make certain statements and we don’t have any concrete positions coming out of the OECD at this time.
“I can assure you that we are not ignoring it, I can assure you that it is being actively worked on, tracked and monitored, drawing on a wide range of expertise from both government and the private sector,” he said. stress.
“Contrary to popular belief in some quarters, the government is following what is happening with regard to taxation of the digital economy and its other implications for the global minimum corporate tax rate,” he said. added.
He explained that representatives from Barbados were attending various meetings with the OECD and that there was a lot of information, “suggestions, concerns [and] proposals that emanate from these meetings”.
Pointing out that the scope of the framework’s two pillars changed regularly, Hunte said that was the main reason why the government was not yet making specific statements.
“We are also aware of various political maneuvers,” he added.
He said that “at the appropriate time” the authorities will make all the information known and ensure that there is inclusion and discussion on the matter.
Highlighting some of the countries’ concerns with the measure, Hunte said it included the lack of mechanisms to avoid double taxation and the lack of clarity on proposed approaches to the allocation process.
He added that there were also concerns that countries favored different approaches to tax calculation and that there was “a quest for clarity” on the burden that would be placed on certain tax administrations, in particular jurisdictions such as Barbados.
There is also no agreement on the sanctions to be imposed when a multinational company does not cooperate with regard to the way it approaches the source of income, he added.
He said there were also several challenges in the EU, including the recent failure of finance ministers from that bloc to agree on some second pillar directives, due to the lack of agreement on a proposal for temporary withdrawal.
Hunte noted that calls have been made for the implementation deadline to be extended by one year.
He told the audience that the OECD was to hold public consultations on April 11 and invite comments and discussions on April 22.
“We can see that there are significant challenges, significant areas that are not yet resolved. Therefore, it would be premature for the government to make any definitive statements regarding this particular area,” Hunte said. [email protected]