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 Restrictions on 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 Common External 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 – InterestArticle 7 - Mergers Article 3 – LossesArticle 8 – Disp./Acq. Of Shares Article 4 – PensionsArticle 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 THANK YOU