Harmful Tax Practices – 2021 Peer Review Reports on the Exchange of Information on Tax Rulings

Barbados

Barbados has met all aspects of the terms of reference (OECD, 2021[3]) (ToR) for the calendar year 2021 (year in review), and no recommendations are made.

In the prior year’s peer review report, as well as in the 2017-2019 peer review reports, Barbados had received a recommendation for identifying and exchanging information on all new entrants to the grandfathered IP regime (ToR I.A.1.3). Barbados has resolved this issue and therefore the recommendation is now removed.

Barbados can legally issue five types of rulings within the scope of the transparency framework.

In practice, Barbados issued rulings within the scope of the transparency framework as follows:

 

Type of ruling	Number of rulings
Past rulings	2
Future rulings in the period 1 September 2017 – 31 December 2017	0
Future rulings in the calendar year 2018	1
Future rulings in the calendar year 2019	0
Future rulings in the calendar year 2020	1
Future rulings in the year in review	1

No peer input was received in respect of the exchanges of information on rulings received from Barbados.

Information gathering process (ToR I.A)

122. Barbados can legally issue the following five types of rulings within the scope of the transparency framework: (i) preferential regimes;1 (ii) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (iii) rulings providing for unilateral downward adjustments; (iv) permanent establishment rulings; and (v) related party conduit rulings.

123. For Barbados, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2015 but before 1 September 2017; or (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as at 1 January 2015. Future rulings are any tax rulings within scope that are issued on or after 1 September 2017.

124. In the prior years’ peer review reports, it was determined that Barbados’s undertakings to identify past and future rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. In addition, it was determined that Barbados’s review and supervision mechanism was sufficient to meet the minimum standard. Barbados’s implementation remains unchanged, and therefore continues to meet the minimum standard.

125. Barbados has met all of the ToR for the information gathering process and no recommendations are made.

Exchange of information (ToR II.B)

126. Barbados has international agreements permitting spontaneous exchange of information, including: (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011[1]) (“the Convention”) and (ii) bilateral agreements in force with 40 jurisdictions.2

127. For the year in review, the timeliness of exchanges is as follows:

 

Future rulings within the scope of the transparency framework	Number of exchanges transmitted within three months of the information becoming available to the competent authority or immediately after legal impediments have been lifted	Delayed exchanges
		Number of exchanges transmitted later than three months of the information on rulings becoming available to the competent authority	Reasons for the delays	Any other comments
	1	0	N/A	N/A

 

Follow up requests received for exchange of the ruling	Number	Average time to provide response	Number of requests not answered
	0	N/A	N/A

128. In the prior year’s peer review report, it was determined that Barbados’s process for the completion and exchange of templates were sufficient to meet the minimum standard. With respect to past rulings, no further action was required. Barbados’s implementation in this regard remains unchanged and therefore continues to meet the minimum standard.

129. Barbados has the necessary legal basis for spontaneous exchange of information, a process for completing the templates in a timely way and has completed all exchanges. Barbados has met all of the ToR for the exchange of information process and no recommendations are made.

Statistics (ToR IV.D)

130. The statistics for the year in review are as follows:

 

Category of ruling	Number of exchanges	Jurisdictions exchanged with
Ruling related to a preferential regime	0	N/A
Cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles	0	N/A
Cross-border rulings providing for a unilateral downward adjustment to the taxpayer’s taxable profits that is not directly reflected in the taxpayer’s financial / commercial accounts	0	N/A
Permanent establishment rulings	De minimis rule applies	N/A
Related party conduit rulings	0	N/A
De minimis rule	1	N/A
IP regimes: total exchanges on taxpayers benefitting from the third category of IP assets, new entrants benefitting from grandfathered IP regimes; and taxpayers making use of the option to treat the nexus ratio as a rebuttable presumption	0	N/A
Total	1

Matters related to intellectual property regimes (ToR I.A.1.3)

131. Barbados offered two intellectual property regimes (IP regime)3 that were abolished as of 1 July 2018 and are subject to transparency requirements under the Action 5 Report (OECD, 2015[2]). It states that the identification of the benefitting taxpayers will occur as follows:

• New entrants benefitting from the grandfathered IP regime: Transparency obligations apply for the two regimes, because grandfathering is provided to entrants that entered the regime after the relevant date from which enhanced transparency obligations apply. In the prior year’s peer review report, it was determined that Barbados changed its law to require taxpayers to declare IP property and additional information to identify related party transactions. In parallel, the Barbados Revenue Authority (BRA) conducted an assessment based on the financial statements of newly formed International Business Companies and International Societies with Restricted Liability. As a result, the BRA identified two new entrants that potentially benefitted from the grandfathered IP regime, but is still auditing these entities. During the year in review, Barbados confirmed that, based on the findings of the audits, the two entities did not benefit from the grandfathered regime. Therefore, Barbados has now finalised the identification process and concluded that no exchanges were required. Hence, the recommendation to identify and exchange information on all new entrants to the grandfathered IP regime as soon as possible (ToR I.A.1.3) can be removed.

• Third category of IP assets: not applicable as the IP regimes has been abolished.

• Taxpayers making use of the option to treat the nexus ratio as a rebuttable presumption: not applicable as the IP regimes has been abolished.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
	No recommendations are made.

References

[3] OECD (2021), BEPS Action 5 on Harmful Tax Practices - Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD Publishing, Paris, http://www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparency-framework.pdf.

[2] OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/9789264241190-en.

[1] OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris, https://doi.org/10.1787/9789264115606-en.