Implications of the Revised Treaty of Chaguaramas for Tax Administrations

1. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Relevant Treaty Provisions • Administrative Issues • Specific Implications • General Implications

2. 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

3. 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

4. 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

5. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Relevant Treaty Provisions • 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

6. 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

7. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Companies • Permanent Residence • Transfer pricing • Management charges • Charges for common services

8. 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

9. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Harmonization of Corporate Taxation

10. 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.

11. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Tax competition • Cross border shopping; • Re-allocation of firms; • Capital flight; • Labour migration; • Downward pressure on tax rates.

12. 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;

13. 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;

14. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Revenue Authority • Why a Revenue Authority? • Lack of interaction among revenue collecting agencies; • Need to attract skilled personnel; • Lack of mobility of staff in Revenue Departments;

15. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Revenue Authority • Four types can be considered: • Statutory Body: • Taxation policy; • Administration of domestic taxes; • Personnel management.

16. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Revenue Authority • Four types can be considered: • Revenue Committee: • Grouping of all revenue agencies; • Consult on consistency of policy • Sharing of information.

17. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Revenue Authority • Four types can be considered: • Revenue authority: • Legally formed body; • Revenue policy; • Effective management.

18. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Administrative Issues • Revenue Authority • Four types can be considered: • Regional authority: • Legally formed body; • Legal advice; • Negotiation of tax agreements; • Revenue policy • Strategic Planning. • Dealing with difficult tax cases;

19. 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;

20. Implications of the Revised Treaty of Chaguaramas for Tax Administrations • Conclusion • Increase networking; • Be proactive in the advice that we give;

21. Implications of the Revised Treaty of Chaguaramas for Tax Administrations THANK YOU