Italy today admitted that it made “an unfortunate mistake” when it placed Barbados on a blacklist of non-cooperative
The admission came following the signing of a Double Taxation Agreement (DTA) between Barbados and Italy at the Ministry of International Business at the Baobab Tower in Warrens, St Michael.
“The blacklist . . . was an unfortunate mistake and we have asked the commission not to repeat that,” said Italy’s Ambassador to Barbados Paolo Serpi, who signed on behalf of his country, adding that the DTA came at “the right moment” and could be considered as a “response to that accident”. Minister of International Business Donville Inniss signed for Barbados.
The Brussels-headquartered European Commission, executive arm of the 28-nation European Union, in June named Barbados along with eight other CARICOM countries, one United States territory and six British Caribbean territories on a list of 30 non-cooperative tax jurisdictions.
The European Commission’s proposals also included reforms to end sweetheart tax deals following a series of investigations into arrangements between EU countries and firms including Amazon, Apple and Starbucks.
“We are today publishing the top 30 non-cooperative jurisdictions consisting of those countries or territories that feature on at least 10 member states’ blacklists,” EU Economic Affairs Commissioner Pierre Moscovici said at the time.
The former French finance minister said the publication of the blacklist was a “decisive step” that would “push non-cooperative non-EU jurisdictions to be more cooperative and adopt international standards.”
The tax proposals were a response to the so-called “LuxLeaks” scandal that exposed deals with the tiny EU state of Luxembourg that saved some of the world’s largest companies, including Apple, IKEA and Pepsi, billions of dollars in taxes. The dealings in Luxembourg had been particularly embarrassing for Jean-Claude Juncker, now the head of the European Commission, who was the small duchy’s premier when the deals were made.
Barbados’ inclusion prompted an angry reaction from the authorities here, with Inniss describing it as “utterly wrong and totally unfair” and vowing to fight it.
Serpi said today’s signing was “a clear signal to Barbados and other countries of the Caribbean that we have to work on trust.”
“This is a very important issue for both of us, and I think we are confronting it today in the best way. This [DTA signing] is the way to open another door for our cooperation and it is a way to put aside, once and for all, irritants in the relations between us the EU countries and countries of the Caribbean,” he said, adding that the tax agreement was not only for fiscal reasons but also for the countries to benefit “in all potential sectors”.
Meantime, Inniss said he was optimistic that Italy would soon “commence a march” towards removing Barbados from the blacklist, following Spain which did so less than a month ago.
Inniss stressed that the island’s reputation and the international business sector, which is estimated to contribute $900 million to the Barbados economy, must be protected from such negativity.
“This is very critical because our international business and financial services sector is a treaty-based one and it is important that we need to develop as many treaties as possible, but we [must] also maintain a good reputation for being a very clean jurisdiction . . . Therefore any marks that are negative against us will have a negative impact upon our sector. And this international business and financial services sector is really too critical for our economy,” said Inniss.
Inniss could not say how soon the DTA would take effect, but he stated that he would continue to work with his Italian counterparts to ensure it was enforced “in a timely manner”.
He said he hoped that the DTA would result in an increase in business here from Italian based companies.
Inniss said the signing of the agreement symbolized the continuous efforts of both countries to enhance closer economic, social and cultural ties, adding that Barbados had also held meetings with the European Commission in Brussels.
He described those meetings as “fruitful” and said he expected Barbados “will soon be removed from that list as a whole”.
“It should be noted that Barbados, in keeping with its continued commitment to transparency and exchange of information, recently [wrote] to the OECD [Organisation for Economic Co-operation and Development] seeking to have this country become a signatory to the multi-lateral convention on mutual administrative assistance in tax matters. And Barbados notes that Italy is already a signatory to this convention and certainly asked them for their support in our application to become a signatory.”
The minister also disclosed that Barbados was currently in discussions with Cyprus in a bid to sign a DTA with that European country.