Implications of the Revised Treaty of Chaguaramas for Tax Administrations
• Relevant Treaty Provisions
• Administrative Issues• Specific Implications• General Implications
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Relevant Treaty Provisions
• Article 32 – Prohibition of New Restrictionson the Right of Establishment
• Article 37 – Removal of Restrictions on Provision of Services
• Article 38 – Removal of Restrictions on Banking, Insurance and Other Financial Services
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Relevant Treaty Provisions • Article 40 – Removal of Restrictions on
Movement of Capital and Current Transactions
• Article 44 – Measures to Facilitate Establishment, Provision of Services and Movement
of Capital
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Relevant Treaty Provisions
• Article 46 – Movement of Skilled Community Nationals
• Article 72 – Double Taxation Agreement
• Article 82 – Establishment of a CommonExternal Tariff
• Article 87 – Import Duties
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
• Article 95 – Co-operation in Customs Administration
• Article 3 of Treaty of Basseterre provides for co-ordination, harmonization and pursuance joint policies in:
(l) Income Tax Administration
(m) Customs and Excise
Relevant Treaty Provisions
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Self-employed persons
Tremendous challenge to tax administrations
Tax systems need to be re-modeled
Introduce a licensing system
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Companies
Permanent Residence
Transfer pricing
Charges for common services
Management charges
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Movement of Capital Need to implement procedures
to track and record transactions
Traditional sources of information no longer available
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Harmonization of Corporate Taxation
Article 1 – Cap. Allow. Article 6 – Min. Corp. Tax
Article 2 – Interest Article 7 - Mergers
Article 3 – Losses Article 8 – Disp./Acq. Of Shares
Article 4 – Pensions Article 9 –Withholding Tax
Article 5 – Ins. Prem. Tax
Article 10 – Exp. & Res. Exps.
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Tax Coordination Fiscal erosion due to excessive
tax competition between member states;
Less employment taxes may result;
Need to look at harmonised environmental taxes.
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Tax competition Cross border shopping;
Capital flight;
Labour migration;
Re-allocation of firms;
Downward pressure on tax rates.
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Double Taxation Agreements Already addressed;
Tax administrations need to ensure that provisions are implemented;
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Simplification of Tax Structures There is a need to be tax
efficient; To many “small” taxes which are
costly to collect;
May result in bigger and costlier tax administrations;
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues • Revenue Authority
Lack of interaction among revenue collecting agencies;
Lack of mobility of staff in Revenue Departments;
• Why a Revenue Authority?
Need to attract skilled personnel;
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues • Revenue Authority
Statutory Body:
• Four types can be considered:
Taxation policy;
Administration of domestic taxes;
Personnel management.
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues • Revenue Authority
Revenue Committee:
• Four types can be considered:
Grouping of all revenue agencies;
Consult on consistency of policy
Sharing of information.
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues • Revenue Authority
Revenue authority:
• Four types can be considered:
Legally formed body;
Revenue policy;
Effective management.
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues • Revenue Authority
Regional authority:
• Four types can be considered:
Legally formed body;
Revenue policy
Strategic Planning.
Legal advice;
Negotiation of tax agreements;
Dealing with difficult tax cases;
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues • Skills of Staff
Personnel training and education;
Incentive based recognition;
Improvement in working conditions;
Highly skilled workforce;
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Conclusion
Increase networking;
Be proactive in the advice that we give;
Implications of the Revised Treaty of Chaguaramas for Tax Administrations
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