News Feed

October 22, 2016 - Intrigue among Barbados Pride With the start of the 2016-17 West ... +++ October 22, 2016 - Water hope Relief could soon be on the way for ... +++ October 22, 2016 - Priest supports ban on religious teaching in schools An outspoken Anglican cleric is sup ... +++ October 22, 2016 - Child’s mental plight Children as young as ten years old ... +++ October 22, 2016 - Bitter infighting mars BLP nominations A political firestorm appears to be ... +++ October 22, 2016 - ‘Illegal’ levy Government’s newly-introduced two ... +++

Attracting money

by Julia Rawlins-Bentham

Minister of International Business and International Transport, George Hutson

The more a country has to offer, the more people will be attracted to its shores.

That is the premise that is guiding Barbados as it seeks to become more attractive to international investors in search of a domicile to secure their investments.

With this in mind, Minister of International Business and International Transport, George Hutson, tabled the Private Trust Companies Bill 2012 in Parliament on October 23, thereby opening the doors to investors who want to manage their own trusts and establish Private Trust Companies.

This move strategically places Barbados in a better position to increase its suite of product offering to the international business sector.

Senior Legal Officer in the Ministry of International Business and International Transport, Stefan Mayers said: “While we [Barbados] are considered a mature jurisdiction in the world in terms of international business, we can’t just rely on the few products that we have and hope that they would continue to attract new business. We have to keep trying to create new products, hence the Foundations and Private Trust Companies legislation.”

He added that his research showed that countries like Bermuda and the Bahamas usually took an old product, rebranded it, tweaked it, and put it on the market again as if it was something new.

“If you create something or revise something you already have and tweak it, you can cause people to have a second or third look at you, and you may be able to attract some investors here,” he said.

While the foundations legislation is still in its final drafting stages, Mayers explained that the private trust company legislation was a structure where a family or group came together and formed an entity to manage their trust(s), rather than pay a professional trustee to do it for them. It is used primarily by wealthy persons who want to manage their finances themselves, and would allow such individuals to maintain more control over their assets, as opposed to entrusting them to a third party.

With such a company, the settlor, members of his family or his advisors can be appointed to the board of directors, and in that capacity they are better positioned to influence the manner in which the trust is administered. The composition of the board can be changed from time to time to bring in members of succeeding generations, and in this way involve them in the management of the family affairs.

“It is a closed environment. It is very low risk to the international business sector, since there are no transactions with third parties. They cannot manage trusts for people other than those in their group — connected businesses,” he said.

Mayers added that it was a very simple piece of legislation, where the applicants would go to Corporate Affairs to register the PTC and pay the $3,000 registration fee, before going to the Ministry of International Business for the licence.

He further explained that a service provider coming forward to register a PTC would become the point person to report to the ministry and provide any information required.

“It is indirect regulation through the service provider,” he said.

Mayers pointed out that the recently amended Trustee Act governed the behaviour of all trustees, whether domestic or international. He explained that when Parliament approved the amendments to the Trustee Act, it gave new powers to the settlor of the trust.

“The settlor is now allowed to settle the trust and have some control over the decisions that are made over the trust and assets. Before, that was not allowed under common law,” he said, explaining that, previously, if the settlor settled the trust and tried to administer it or interfere with how it was run, then the trust could be deemed “a sham”.

He also expressed the hope that the PTCs would become available within the first quarter of the new year, after the legislation is proclaimed.

“I think we should get some good response from the international business sector outside of Barbados, because they are looking towards us to have new products, as there has been interest in PTCs for a while,” he added.

The senior legal officer observed that the new management vehicle placed Barbados in a better position to target countries within Latin America that operate under a civil law system unlike Barbados’ common law system. These persons are unfamiliar with common law trusts, where assets are surrendered to a trustee so the self-managed PTC would be more attractive to them.

“When we create new legislation we are targeting the entire world, but we see a need especially in Latin America where people are looking to invest further afield. There is ever increasing wealth in Latin America now, more millionaires,” Mayers said.

He contended that Latin America could prove to be a big market for Barbados over the next 10 to 20 years.

“They have oil and other natural resources, and the countries are becoming richer. Brazil is a country that we need to get into because it is the super-power of Latin America right now.

“There are a lot of people in Brazil with disposable income and assets they want to invest outside of Brazil. The Government has established an embassy in Brazil, and there is much potential for trading with Brazil, so that is another possible big market for us,” he said.

However, he made it clear that while Barbados was seeking to improve its suite of products to attract more international business here, the island would continue to be a tax jurisdiction.

“Barbados has long held itself out to be a tax jurisdiction, so we are not considering going to a zero tax rate for international business entities.

“We, however, have revised our tax structures to a tiered system to go down in percentage, so we can charge in terms of tax on international business entities depending on their net worth; but we cannot go to zero tax and risk being branded a tax haven,” he stressed.

Leave a Reply

Your email address will not be published. Required fields are marked *