Global Tax Cooperation: Barbados Signs Multilateral Convention
Minister in the Ministry of Finance, Ryan Straughn, signing tax cooperation agreement (GIS Photo)
Barbados has signed the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule (STTR MLI), joining several jurisdictions in strengthening global tax cooperation.
Background
The signing ceremony was held in France, where Minister of Finance Ryan Straughn signed the agreement on behalf of Barbados. The STTR MLI aims to ensure fairer and better international tax arrangements, particularly for developing countries.
Statement from Minister Straughn
In addressing members from more than 57 countries, Minister Straughn noted that Barbados is a committed partner and highlighted the need for small and vulnerable states to participate in the process. He also thanked members for understanding that the impact of the reforms is much more acute than for large states, as smaller ones enable these global changes.
Global Tax Cooperation
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The STTR Multilateral Instrument was signed by nine participating jurisdictions, and ten signed a letter of intent to sign it as soon as possible. Twenty-four participating jurisdictions that are outside the scope of the STTR commitment signed a statement of support, and 14 jurisdictions that chose not to implement the STTR via the STTR Multilateral Instrument at this stage joined the ceremony as participants.
OECD and Barbados
Minister Straughn also held an introductory bilateral meeting with Secretary-General of the Organisation for Economic Cooperation and Development (OECD), Mathias Cormann, and Director of the Centre for Tax Policy and Administration, Manal Corwin. Both expressed their commitment to strengthening ties with Barbados through both tax and non-tax initiatives.
Conclusion
The signing of the STTR MLI marks a significant milestone in Barbados’ ongoing commitment to fair taxation, reducing profit shifting, and curbing harmful tax competition. As an early adopter, Barbados sets a precedent for countries to allow developing countries to protect their taxing rights and secure sustainable revenue streams for the future.
FAQs
- What is the Pillar Two Subject to Tax Rule (STTR)?
The STTR aims to address the issue of low or no taxation on cross-border payments by ensuring a minimum tax rate of 9 percent on specific income streams. - Why is the STTR important?
The STTR is vital to the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. It aims to reduce the incentive for multinationals to profit shift, curb harmful tax competition, and remove inappropriate pressure on countries to offer low or no corporate tax arrangements in return for investment. - How will the STTR impact Barbados?
The STTR will help generate important additional revenues for governments around the world, including Barbados. It will also help to reduce profit shifting and curb harmful tax competition, which will benefit local businesses and investors. - What is the role of the OECD in this agreement?
The OECD played a key role in the development of the STTR MLI and is committed to strengthening ties with Barbados through both tax and non-tax initiatives.