CARICOM: Aligning new taxation regime with OECD GMT?.

Arinjay Jain

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August 30, 2022 |

2 mins read

With the new changes taking place in the global taxation regime, Barbados and the others in the Caribbean Community (CARICOM) have begun to think of reviewing their double tax treaties. Such revamping is in line with the aim to create provisions to protect their tax base from erosion and to create corporation tax rules to adapt with the global changes.

The Secretary General, Secretariat Dr.Carla Bernett brought to the table that in order to modernise and the financial sector along with increase in FDIs, tax governance and financial regulation has to be in consonance with the global standards.

What is the current situation?

The current DTAA between the Member States of CARICOM has cited numerous incidents of non-compliance as Member states continue to run afoul of the provisions in place in the intra-tax treaty. The International Tax governance encourages exchange of tax information in order to combat concerns such as tax evasion, tax avoidance which have evolved, owing to digitalisation, beyond the barricades that had been designed to counter them.

Suggestions

The community is considering the adoption of the OECD (Organisation for Economic Cooperation and Development)’s ‘Two – Pillar’ tax regime; Pillar 2 suggests a Global Minimum Tax (GMT) rate of 15%. Talks are in motion and it is set to be implemented in 2023. GMT was designed with the aim that MNEs (Multinational Enterprises) that operate across borders will have to pay at least a minimum amount of tax, no matter where they are operating from.

Other suggestions from the Secretariat included making the region a single economy, a regional reporting system, enhancing air and maritime transport architecture and creating provisions to remove geographical and political barriers to allow for free movement of citizens.