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Implications of the Revised Treaty of Chaguaramas for Tax Administrations
• Relevant Treaty Provisions
• Administrative Issues• Specific Implications• General Implications
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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
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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
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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
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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
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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
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Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Administrative Issues
• Companies
Permanent Residence
Transfer pricing
Charges for common services
Management charges
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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
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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.
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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.
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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.
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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;
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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;
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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;
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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.
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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.
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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.
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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;
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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;
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Implications of the Revised Treaty of Chaguaramas for Tax Administrations
Conclusion
Increase networking;
Be proactive in the advice that we give;
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Implications of the Revised Treaty of Chaguaramas for Tax Administrations
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