Barbados and the UK have signed a Double Taxation Agreement (DTA) to facilitate an improved business relationship between the two nations. The Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Tax Evasion meets modern standards for tax transparency and facilitates the information exchange for tax purposes between the two countries.
The new protocol to the Barbados UK tax treaty was signed on April 25, 2012.
This latest tax treaty serves an important role in updating the existing, but out-of-date, Barbados UK tax treaty signed in 1970, which at the time, only addressed income and capital gains tax. The original treaty fell short of modern standards since it did not facilitate the exchange of information related to international business entities. The new DTA will now include international business entities making it more comprehensive since it now covers these widely used international structures.
The new protocol to the Barbados UK tax treaty was signed by George Hutson, the Barbadian Minister of International Business and International Transport and by Henry Billingham, the UK’s Minister of State in the UK Foreign and Commonwealth Office.
Commenting on the DTA, Minister Hutson said “With the update of the exchange of information provisions, the international business entities are now covered by the Convention and Barbados can, therefore, exchange information on these entities.”
He noted that the treaty would deepen “mutual co-operation in matters of international taxation and would further bolster relations between Barbados and the United Kingdom.”
The UK Minister commented that the DTA would increase trade by reducing bureaucracy for international businesses that wish to setup in Barbados and likewise for those wishing to export to the UK.
Mr. Billingham stated, “We believe in having the right conditions for enterprise and business, and the important framework is to have in place a tax system that is fit for purpose and that meets international standards, and gives businesses comfort.”
This treaty is a welcome development. It continues to build on Barbados’ approach to its offshore business sector which is based on expanding its tax treaty network and through it, continue to satisfy the OECD’s standard for tax information exchange and transparency.