Gov’t Looking To Expand Rum Industry
The Government of Barbados has initiated a project which is geared towards the expansion of the country’s rum industry. Word of this came from Commerce Minister, Donville Inniss, on Monday, as he delivered the feature address at a reception and tasting of Authentic Caribbean Brands. The event was hosted by the Directors of the West Indies Rum and Spirits Producers Association Inc. (WIRSPA), at the Accra Beach Hotel and Spa. Mr. Inniss stated that the objective of the initiative was two-fold: transitioning the industry’s output of bulk rum to branded rum; and engaging stakeholders in a strategic partnership to expand the market share of the local brands in the hospitality sector. Explaining that there were three components to the programme, the Minister noted that this would include a geographic indicator of Barbados’ rums, supported by a Barbados Rum Marque, which would become a certifying seal of approval. The other components, he revealed, included the repositioning of the industry to incrementally convert bulk rum to primarily branded rum; and embarking on an ongoing promotional campaign in the tourism sector to secure Barbados Rum Brands as a spirit of choice across hotels and bars. “I am proud to say that this initiative has begun to bear fruit with the successful completion of the inaugural Barbados Sugar and Rum Season. This event was held during the period February 1 to April 1, 2017, under the auspices of the Barbados Tourism Product Authority. …Its objective was geared towards enhancing the island’s cultural heritage, particularly rum and sugar, and culinary tourism product offerings,” he disclosed. Mr. Inniss also revealed that statistics for the period 2012 to 2016 showed that Barbados’ exports of rum to one of its lucrative markets – the European Union, stood at approximately BDS $89.9 million. He pointed out that the industry continued to provide valuable foreign exchange and revenue; supported the sustainability and linkages of many other businesses within the agro-processing and tourism industries; and contributed significantly to job creation. Article compliments BGIS.
Questions Surround Money Paid into US Bank Account of Bahamas Minister
A Bahamian Government minister has come under scrutiny as details surface that he received over $94,000 from a high profile businessman that was deposited into a US bank account. Labour and National Insurance Minister Shane Gibson admitted to receiving the funds between August 2011 and January 2013, but insists the transactions were above board. Documents obtained by The Tribune newspaper detailed monthly deposits in the amount of $5,000 by Canadian fashion mogul Peter Nygard, a controversial permanent resident in the Bahamas prior to the 2012 general election and even after Gibson was appointed as a minister. The majority of the payments, which totaled $94,131.10, were identified as compensation for professional services. According to the Tribune, Gibson initially said the businessman paid the money “for no particular reason”. In a follow-up a statement, he claimed the money was used as a contribution to his 2012 election campaign and for community initiatives in the Golden Gates constituency, such as scholarship to students. “Thanks to contributions from Mr Nygard and others, I, as a member of Parliament, was able to continue many community initiatives like a scholarship programme, awarding tens of thousands of dollars in scholarships to deserving students in my constituency whose parents could not afford to cover their full tuition. “Additionally, Golden Gates was able to run a successful election campaign in the run-up to the 2012 general election. Following our victory at the polls, those contributions enabled me to pay off debt incurred during the campaign season. I think it is sad and unfortunate that those who oppose me would seek to tarnish something that has benefited so many people in my constituency simply to grab headlines and win a seat,” he said. Gibson made it clear that he would not be distracted from serving his constituents. While there are no laws governing election campaign financing in the Bahamas, the transaction is likely to be a major talking point ahead of the May 10 general election. Nygard has reportedly made previous claims that he funded the election campaign of the Progressive Liberal Party – a claim that Gibson has denied. Back in 2007, Gibson, who served as Immigration Minister, was forced to step down, after a scandal involving American actress and model Anna Nicole Smith, over his fast-tracking of her permanent residency in the Bahamas. Article compliments Caribbean 360.com
Chevron Loss in Australian Court May ‘Empower’ OECD Tax Reform
Chevron Corp., the largest U.S. oil producer after Exxon Mobil Corp., hopes to raise as much as $10 billion this year from global asset sales to counter the profits-sapping slump in energy prices, reports BNA. Benchmark oil prices have been stuck at around $50 a barrel since the start of the year, which means influencing the global policy for the taxation of multinational companies may not be a similar priority for Chevron CEO and Chairman John Watson. Yet that is exactly what the U.S.-based oil producer has managed in its failure to win an appeal in Australia over a long-running transfer pricing dispute, according to tax practitioners. The April 21 ruling from Australia’s second-highest court may both “influence and empower” the OECD over its 15-action plan to combat tax avoidance strategies used by multinational companies, says Zara Ritchie, the Melbourne-based leader for global transfer pricing at accountancy firm BDO. If this happens, “more and more” tax authorities will likely target multinationals over the corporate interest deductions at the center of Chevron’s legal dispute with the Australian Taxation Office, or ATO, adds Daniel Head, the London-based head of U.K. transfer pricing at accountancy firm KPMG. $2.5 Billion Loan, Untaxed Profits The Federal Court of Australia appeal ruling last week related to a $2.5 billion inter-company loan that Chevron Australia Holdings Pty. Ltd. received in 2003 to finance a Western Australia gas export project, with the ATO seeking A$340 million ($257 million) in unpaid taxes, interest and penalties. The inter-company loan to Chevron’s Australian unit should have been made on the same basis as a similar transaction involving independent companies, otherwise known as the arm’s-length principle, under transfer pricing rules which aim to ensure cross-border transactions are priced on a fair basis. Yet by borrowing at a local rate with just 1.2 percent interest and then lending to the Australian unit at 9 percent, a U.S.-based subsidiary of the Australian unit benefited from Chevron’s group credit rating and subsequently received “significant” untaxed profits, according to the April 21 court ruling. As part of its anti-avoidance project, the Organization for Economic Cooperation and Development will deliver guidance on the application of the arm’s-length principle to intra-group loans next year. About A$420 billion in related-party loans were made in Australia in 2014-15, with the energy and resources sector making up almost half the total amount, according to the most recent ATO figures. 2018 Publication Guidance on the arm’s-length principle to intra-group transactions is a remaining part of Actions 8 – 10 of the OECD’s anti-avoidance project against base erosion and profit shifting, known as BEPS. In an April 24 email, a spokesman for the OECD’s transfer pricing team told Bloomberg BNA that work on the arm’s-length guidance is “ongoing,” with publication scheduled for “early in 2018.” Due to the absence of detailed guidance and the complexity of the litigation process, substantial transfer pricing cases on the arm’s-length principle for intra-group financing are rare, according to BDO’s Ritchie, and this has given importance and influence to any that make it to the courtroom. Like Chevron in Australia, U.S.-based conglomerate General Electric Co. received a ruling seven years ago in Canada over the arm’s-length principle of inter-company financing. The legal concepts raised in that case are part of the OECD’s existing guidelines for BEPS Actions 8 – 10, Ritchie adds. “We can expect the OECD’s new BEPS-related guidance on pricing of intra-group financing to further endorse” the principles raised in Chevron’s case, says Geoff Gill, a Sydney-based transfer pricing partner and economist at accountancy firm Deloitte. “For related party debt arrangements, the implication is that taxpayers need to consider whether the terms of the loan can reasonably be considered to be commercial.” Cross-Border Impact While last week’s ruling may influence the OECD’s guidance next year, it will equally allow the ATO to publish its own financing arrangements guidance and give the tax authority confidence to pursue cross-border cases, according to Jason Casas, Grant Thornton Australia’s head of transfer pricing. “The ATO has been waiting for the outcome of this case,” he says about last week’s Chevron ruling, which the company may appeal to Australia’s highest court. “The decision places greater emphasis on multinational companies to review and assess the commerciality of their related party dealings.” Following the verdict, an ATO spokesman told Bloomberg BNA the ruling is “significant” and has “direct implications” for similar court cases involving related-party loans. They also noted that the Chevron case is the first in Australia to test the ATO’s transfer pricing rules on intra-group transactions. Chevron, meanwhile, said in a statement posted on its website following the ruling that it will review the decision “to determine next steps, which may include an appeal to the High Court of Australia.” Cost of Appeal Yet Chevron may “think twice” over an appeal due to financial costs, says David Sayers, a Milton Keynes-based international tax partner and transfer pricing specialist at accountancy firm Mazars. The ruling is going to have multinational companies “looking over their shoulder,” and “not just in Australia,” he adds on the impacts of the case. “Transfer pricing advisers who are benchmarking loans are really going to have to change their approach when it comes to using credit ratings.” Chevron in Oz Chevron is one of Australia’s largest resources investors, mainly due to an $88 billion spending spree on its Gorgon and Wheatstone LNG developments in Western Australia. It also holds a 16 percent stake in the state’s North West Shelf project, which started shipping liquefied natural gas in 1989. Article compliments IFC Review.