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Barbados Cabinet has decided to put in place new measures to ensure that the country’s tax regime is compliant with the OECD’s base erosion and profit shifting (BEPS) recommendations, Minister of International Business and Industry, Ronald Toppin, said on November 15.
“I can confirm that we will be compliant with the OECD and European Union requirements at the end of this year,” Toppin announced. “It is not that we hope to be, or that we speculate that our negotiations will go well. We will be compliant.”
Earlier this year, member countries of the Inclusive Framework on base erosion and profit shifting, noted in a report that two of Barbados’ regimes – the International financial services and the Credit for foreign currency earnings/Credit for overseas projects or services – were concluded as “potentially harmful.” This conclusion was subsequently updated to “in the process of being amended” after Barbados committed to amending these regimes.
Toppin said that the International Business Companies (IBC) Act will be abolished with effect from December 31, 2018, and no new IBC licences will be issued.
He added: “The Societies with Restricted Liability Act will be amended to remove references to International Societies with Restricted Liability (ISRL) and so from December 31, my Ministry will not issue any new ISRL licences.”
“Effective January 1, 2019, all IBCs and ISRLs will automatically by operation of law become Regular Barbados Companies and Societies. Those IBCs and ISRLs that qualify for grandfathering are entitled to be so grandfathered until June 30, 2021.”
Also from January 1, 2019, all former IBCs and ISRLs, which earn 100 percent of their income in foreign exchange, will be entitled to receive a Foreign Currency Permit.
“This will afford them practically the same benefits they presently enjoy. Therefore those entities, IBCs and ISRLs, are encouraged to submit their renewals as normal. My Ministry will be advising you shortly on the transitioning process which will be made as smooth and as seamless for you as possible,” Toppin said.
Toppin said that the Government has engaged experienced draftsmen to work on the legislation and to aid the Chief Parliamentary Counsel’s office in meeting the December 31, 2018, deadline.