1) 2 01 5 CE ER M M CO INTERNATIONAL BUSINESS OPENING NEW MARKETS INTERNATIONAL INSURANCE EMERGING OPPORTUNITIES WEALTH MANAGEMENT INVESTMENT STRATEGIES S ES N SI BU N IO AT IC UN M M CO N IO AT UC ED N EE GR GY LO O N CH TE TAX TREATY NETWORK Austria X Bahrain X Botswana Canada X China X Cuba X Czech Republic Finland X Iceland X Luxembourg X Malta Mauritius X Mexico X Netherlands X Norway Panama X Seychelles X Singapore X Spain X Sweden Switzerland X UK X USA X Venezuela CARICOM - Antigua and Barbuda | Belize | Dominica | Grenada Guyana | Jamaica | St. Kitts and Nevis | St. Lucia St. Vincent and the Grenadines | Trinidad and Tobago Barbados - Innovative Solutions for International Business Expansion 

2) kpmg Today’s organisation can’t afford yesterday’s advice KPMG’s professionals provide the hands-on experience and knowledge you need to help you navigate the challenges of regulatory changes through forward-thinking advice and applications in audit, tax and advisory services. From cross border tax services, mergers and acquisitions, to management consulting strategies, FATCA and regulatory compliance and anti-money laundering services we offer insight and experience that can help you face the issues. For more information on how KPMG can help you sharpen your edge contact any of our Barbados Partners or Directors at 246 434 3900. Audit Carol Nicholls Michael Edghill Jan Martinek cnicholls@kpmg.bb maedghill@kpmg.bb janmartinek@kpmg.bb Tax Wayne Lovell wlovell@kpmg.bb Advisory Lisa Taylor Brenda Pope Christopher Brome Melanie Greenidge lisataylor@kpmg.bb bpope@kpmg.bb cbrome@kpmg.bb melaniegreenidge@kpmg.bb www.kpmg.bb © 2015 KPMG, a Barbadian partnership and a member rm of the KPMG network of independent member rms afliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 

3) Sponsors Contents Brookfield International Bank Inc. Chancery Chambers Delany Corporate Delany Law Deloitte & Touche Ernst and Young First Provider Goldstream Management Services Ltd. JLT Towner KPMG PricewaterhouseCoopers International Insurance CGE International Services Ltd. Global Re SCC Marsh Canada Limited USA Risk Group Wealth Management CIBC FirstCaribbean International Bank Cidel Bank & Trust DGM Bank & Trust J&T Bank and Trust Inc. RBC Wealth Management, Caribbean Scotiabank The Barbados Stock Exchange – Opportunity Knocks 25 The Barbados "Africa Project": An Update 25 Providing Quality Services to Clients Globally 26 Steady Growth makes Barbados a Captive Jurisdiction of Choice 27 The Role of the Financial Services Commission in a Changing Regulatory Environment 28 The Popularity of Small Captives is on the Rise 29 FATCA Impact for Barbados – Key Points ... and so much More 32 Fixed Income Strategy: Keep Your Eyes on the “Curve” Base Erosion and Profit Shifting – the Impact on International Financial Centres 34 Current Market Trends in International Wealth Planning 16 Transparency in a Changing International Landscape 36 Private Trust Companies 16 A Bright Future in Barbados 37 Add Value to Captives through Asset Allocation 17 Why Barbados – Its Five Key Strengths 38 International Mutual Funds: a Barbados Perspective 18 International Business 24 30 Barbados International Finance & Business magazine is a publication of Invest Barbados. Invest Barbados is grateful to the international business community and the service providers for their support on the editorial committee and in contributing articles. We also thank the following sponsors: 4 Welcome to the 2015 Edition 5 Message from the Minister 7 Barbados – Your Gateway to International Business Expansion Barbados: Vital to Canada's Future Global Strategy 40 International Estate and Succession Planning for the Family Office 41 Right Environment for International Captive Insurance Manager 42 The Beauty of Barbados as an International Financial Centre for Private Wealth Strategies 8 9 The G-8, G-20 and the OECD Agendas: Their Impact on Barbados Barbados – the Gateway to Latin America 9 Leveraging the Canada-Barbados Partnership 10 The OECD's Tax Avoidance Focus 12 Canadian Financial Institution Regulation – Ensuring Barbados' International Business Companies Fit 14 Latin America – Opportunities for Barbados 15 Photo Credit: Cover photo of Bridgetown Port - courtesy Barbados Port Inc. 20 The Foreign Account Tax Compliance Act and its Implications for Barbados 22 Choosing a Domicile – an Emerging Country Perspective 22 Barbados: a Compelling Choice 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  3  

4) Welcome to the 2015 Edition I t is my pleasure to introduce the seventh edition of Barbados International Finance & Business. During 2014, Barbados graduated to the second phase of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and in October 2014 Barbados was appointed Vice Chair of the Steering Committee Barbados continues to market itself to the Latin American market, with Invest Barbados sponsoring several conferences and workshops to promote the domicile of the Organisation for Economic Co-operation and Development (OECD). It has also seen the emergence of Base Erosion and Profit Shifting as an issue. Exchange Agreements and intensifying its efforts to negotiate DTAs with countries in Latin America. Barbados remains a cost-effective, Barbados continues to market itself to the Latin American client, well-regulated IFC, with world-class infrastructure and an with Invest Barbados sponsoring several conferences and workshops intelligent workforce. Importantly too, Barbados is very much to promote the domicile. Meanwhile, Barbados remains the open for business. domicile of choice for Canadian-parented companies and companies incorporated in its Double Taxation Agreement (DTA) network of We invite you to consider us as your domicile of choice, providing countries, with particular focus on Latin America and Europe. innovative solutions for international business expansion, and also invite you to send your comments and suggestions to Barbados’ DTA network continues to expand and, currently, bifb@investbarbados.org. Barbados has DTAs with 34 countries, with another 11 awaiting finalisation. The OECD’s position on International Financial With very best wishes, Centres (IFCs) has resulted in Barbados signing Tax Information James Gardiner 4  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

5) MESSAGE FROM SENATOR THE HON. DARCY BOYCE MINISTER IN THE OFFICE OF THE PRIME MINISTER Welcome to the seventh edition of the Barbados International Finance & Business magazine. Seven years on from the 2007/2008 global financial crisis, the world economy still remains relatively fragile, though prospects for growth in 2015, according to the United Nations Conference on Trade and Development’s World Investment Report and the International Monetary Fund’s October 2014 World Economic Outlook, are positive. The period following the crisis has been marked by increased competition among international financial centres (IFCs) and simultaneously, heightened scrutiny of IFCs by the G-20 and some international organisations. The Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting project, as well as its Multilateral Convention on Mutual Administrative Assistance in Tax Matters, have been introduced to redress ‘unfair’ tax practices and tax evasion. These projects are the new standard bearers to enhance transparency in the rapidly changing, interconnected, global environment. We have also witnessed an increase, in some quarters, in the unfortunate labelling of IFCs as facilitators of tax evasion and money laundering. More recently, however, a growing body of empirical studies has emerged suggesting the opposite. Some studies document the vital contribution that IFCs make to the global financial system and their important role as conduits of much needed liquidity. Further, others have posited that a number of IFCs have better regulatory and compliance processes than some developed countries. The key watchwords for IFCs will therefore continue to be transparency, quality, innovation, regulation and reputation. Barbados has always prided itself on implementing best practices, and its reputation continues to be anchored on the tenets of stability and consistency, even in the face of the rapidly changing regulatory environment. The maintenance and promotion of Barbados as a compliant, transparent and well-regulated jurisdiction is pivotal to our success. That is part of the reason why we continue to seek opportunities to highlight the integrity and interests of small IFCs like Barbados. During 2014, Barbados successfully hosted its inaugural conference on IFCs themed, IFCs in a Borderless Digital Economy. The forum acknowledged the contribution of IFCs to sustainable global development, and drew attention to the need for representation of the interests of small IFCs at forums that develop and implement international tax initiatives. In October 2014, Barbados welcomed the opportunity to serve as a member and Vice Chair of the OECD’s Global Forum Steering Committee. Involvement in this forum provides an opportunity to make a contribution to the strategic direction of the world’s most influential body responsible for international tax transparency, and whose decisions affect not only Barbados, but the wider Caribbean Community, as well as IFCs generally. Barbados intends to continue to enhance its appeal as a preferred IFC. In this regard, efforts to expand our network of double tax and bilateral investment agreements will be accelerated. We will also become signatories to the Multinational Convention on Exchange of Tax Information and, where necessary, conclude Tax Information Exchange Agreements with specific countries. Focus will be directed towards the conclusion of treaties with countries in Eastern Europe, Latin America, as well as in key African nations. Our intention to become the pre-eminent international financial centre in the Western Hemisphere recognises that the establishment of an international trading floor in our stock exchange is necessary. We confidently expect to launch this initiative shortly. In like manner, the establishment of an alternative dispute resolution centre is being actively pursued. Government is fully committed to introducing relevant innovative products, and to nurturing a responsive, efficient business environment. We look forward to attracting increased levels of foreign direct investment and to enhancing the competitive advantage of global investors. Senator The Hon. Darcy Boyce Minister in the Office of the Prime Minister 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  5  

6) Contributors Technical Review: Ben Arrindell Editorial Committee: James Gardiner Caroline Gardiner Wayne Kirton Sandra Payne Emeline Taitt Authors: Emeline Taitt Invest Barbados etaitt@investbarbados.org Ben Arrindell Cidel Bank & Trust barrindell@cidel.com Dustin Delany Delany & Associates dd@delanylaw.com Wayne Lovell KPMG wlovell@kpmg.bb Françoise Hendy Government of Barbados fh@francoisehendy.com Ricardo Knight JLT Towner Barbados ricardo_knight@jlttowner.bb Kirk Cyrus JLT Towner Barbados kirk_cyrus@jlttowner.bb Randy Graham Financial Services Commission rgraham@fsc.gov.bb Trevor Mapplebeck Marsh Canada Limited trevor.mapplebeck@marsh.com Nicholas Crichlow Marsh Management Services (Barbados) Ltd. nicholas.crichlow@marsh.com Glenna Smith Smith Compliance Consulting Inc. smith_glenna@hotmail.com Jerome Dwight Alison Manzer Cassels Brock & Blackwell LLP amanzer@casselsbrock.com Royal Bank of Canada (Caribbean) Corporation jerome.dwight@rbc.com Liza Harridyal-Sodha Marcia Cyrus Harridyal Sodha & Associates liza@lizalaw.com Ikins Clarke Deloitte & Touche idclarke@deloitte.com Sir Trevor Carmichael, Q.C. Chancery Chambers chancery@chancerychambers.com Connie Smith Tricor Caribbean Limited connie.smith@bb.tricorglobal.com Dr. Walid Hejazi University of Toronto hejazi@rotman.utoronto.ca Bruce Zagaris Berlner, Corcoran & Rowe, LLP bzagaris@bcr-dc.com Dominique Pepin Ernst & Young dominique.pepin@bb.ey.com CIBC FirstCaribbean International Bank marcia.cyrus@cibcfcib.com Roland Jones Royal Bank of Canada (Caribbean) Corporation roland.jones@rbc.com Gordon Anderson Cidel Bank & Trust ganderson@cidel.com Ryle Weekes Cidel Bank & Trust rweekes@cidel.com Roger Cave Fortress Fund Managers roger@fortressfund.com Darren Stark Anchor Counsel Corporation dstark@anchorcounsel.com Paul Jenkins Scotiabank paul.jenkins@scotiabank.com Maria Robinson Ernst & Young maria.robinson@bb.ey.com Marlon Yarde Barbados Stock Exchange marlon.yarde@bse.com.bb Design, Layout & Printing: EVillages Ltd. Barbados International Finance & Business - 2015 Edition Published by Invest Barbados Barbados: (246) 626-2000, Toronto: (416) 214-9919, New York: (212) 551-4375 Email: bifb@investbarbados.org | www.investbarbados.org © Copyright Invest Barbados 2015. All rights reserved. No part of this publication may be reproduced or transmitted in any form or any means, or stored in any retrieval system of any nature without prior written permission of the copyright holder. The views expressed in this magazine are those of the contributors, and not necessarily those of Invest Barbados. The information provided in this magazine is meant as a guide only and does not amount to professional advice. 6  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

7) Barbados - Your Gateway to International Business Expansion I t is my distinct pleasure to welcome Increasing the awareness of our brand is also central to the you to the latest edition of Barbados government’s strategy. Efforts to expand our marketing reach are International Finance & Business also progressing smoothly. Over the next five years, concentration magazine. Permit me also to specially will not only centre on the Canadian, US and UK markets, but will thank the contributors and sponsors of the magazine, and you, for reading the flagship publication of Barbados’ international business sector. Barbados continues to make significant strides and build on its success. In spite of increased competition and regulatory changes, uneven economic recovery across the globe, and the advance of an increasingly seamless and digital economy, a growing ... investors are choosing Barbados as their location of choice, particularly when they are seeking to enhance their competitiveness number of investors are choosing Barbados as their location of choice, particularly when they are seeking to enhance their competitiveness. For example, during the last five years, the number of international business companies registered grew from extend to the larger economies in Latin America, Africa and the 2,859 to 4,016. The international business sector in Barbados Middle East. In this regard, we are already seeing encouraging remains a mainstay of the economy. results, particularly in the formation of new Captives. We are also recording tangible results from the extractive and ICT Barbados’ continuing success is built on a solid foundation of decades industries, as well as from high net worth individuals who prefer of experience, excellent management and constant innovation. the quality lifestyle in a tropical environment that Barbados Recognition as a leading international financial centre is predicated offers. Globally, investor confidence is again climbing. on enviable accolades earned for stability, integrity, right-sized augurs well for Barbados as we pursue a post-2015 sustainable regulation and transparency, as well as on having a welcoming development thrust. environment. These qualities have enabled our strategy of poised to continue its role as a mainstay of the national economy. This The international business sector is well attracting businesses of substance in financial services, information and communications technology (ICT), manufacturing and, more I am particularly excited about the future growth prospects for recently, in the renewable energy and education sectors. Barbados as an international business and financial centre. Barbados provides innovative solutions for success and will Excellent business facilitation will be pivotal to building and continue to upgrade its product mix to be on par with international sustaining our strong brand. Cognizant of this, government has best practice and emerging market demands. implemented a number of innovations to enhance our business environment. If you haven’t tried our jurisdiction before, I invite you to do so. Let Barbados be a part of your success! A committee to review and establish new service delivery standards is now in place. Further, discussions are at an advanced Emeline Taitt stage with respect to facilitating online incorporations and Chief Executive Officer licensing of entities. One of our key facilitators, the Immigration Invest Barbados Department, continues to enhance access to its services online. Added to these, government introduced an indefinite licensing regime for international business companies and societies with restricted liability. These upgrades will improve the ease of doing business in Barbados. To expand our product offering, new pieces of legislation to facilitate the registration of limited liability partnerships, incorporated cell companies, as well as corporate and trust services and providers, are close to completion. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  7  

8) International Business The G-8, G-20 and the OECD Agendas: Their Impact on Barbados by be n arri n dell O ver the last 15 years, we have seen a number of initiatives the Government intends to intensify its efforts to negotiate by international organisations, such as the G-8, the G-20 DTAs with countries in Latin America. Currently, Barbados has and the Organisation for Economic Co-operation and DTAs with Cuba, Mexico, Panama and Venezuela and negotiations Development (OECD), aimed at combating the use of international financial centres (IFCs) by taxpayers, principally multinationals, resident in high-tax countries. The latest of such initiatives was launched by the OECD in 2013 in a paper titled “Action Plan on Base Erosion and Profit Shifting” (‘the BEPS Project’). This initiative was prompted by the perception among OECD member countries that, over time, weaknesses have developed in the existing domestic law and treaty rules governing the taxation of cross-border profits. It is perceived that such weaknesses create opportunities for multinationals to shift profits with Chile and Colombia are ongoing. ... the focus on exchange of information has had the effect of enabling Barbados to expand its DTA network ... from high-tax to low-tax jurisdictions. With the exception of the actions designed to address the tax challenges of the digital economy, the proposed initiatives, dealing with such issues as tax treaty abuse, the use of hybrid instruments, In relation to the BEPS project, perhaps the area that potentially substance, transfer pricing and thin capitalisation, are not new. will have the most impact, from a Barbados point of view, is the Nevertheless, this recent development represents a more proposed focus on treaty shopping and substance. However, concerted effort by the OECD to coordinate the actions of its Barbados has a tradition of attracting businesses of substance member countries in combating BEPS. However, in order to build and, therefore, has the necessary infrastructure, including flexible a wide consensus for the BEPS Project, the OECD has invited G-20 immigration laws, to enable investors wishing to establish countries that are not OECD members to participate as associates. operations in Barbados to structure their businesses in a way that Other non-member countries may be invited to participate as meets the substance test. invitees on an ad hoc basis. With its emphasis on businesses of substance and focus on new There is a concern that this latest initiative, together with the markets, particularly in Latin America, Barbados is in a good work of the Global Forum on Transparency and Exchange of position to continue to thrive as an IFC, despite the challenges Information, will have a significant negative impact on Barbados. highlighted above. F Given its history as an IFC with a network of double taxation agreements (DTAs), Barbados has never relied on the absence of information exchange agreements or mechanisms for its success. Consequently, to date, Barbados has not suffered greatly from the OECD’s work in this area. On the contrary, the focus on exchange of information has had the effect of enabling Barbados to expand its DTA network and to negotiate DTAs with a number of previously reluctant OECD countries, such as Mexico and Spain. Currently, Barbados has DTAs with 34 countries, with another 11 awaiting finalisation. However, it is expected that the continued international focus on IFCs will make it more difficult in the future for Barbados to obtain DTAs with OECD countries. In recognition of this fact, the Barbados Government’s Strategic Plan for the International Business Sector 2014-2019 focuses on expanding its network of DTAs with countries in Africa, Asia and Latin America. Notably, these are also the countries that are continuing to experience economic growth and significant inward investment. In fact, the Barbados Government has identified Latin America as the area that presents the greatest opportunities for growth in the international financial services sector in the immediate future. Consequently, 8  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

9) International Business Barbados - the Gateway to Latin America by dusti n dela n y B arbados’ ties to Latin America (LatAm) date back to the The notion of a global network plays well into Barbados’ fourth century, when archaeologists believe the Amerindians strategy. Supplementary to its LatAm movement is Barbados’ tax made their way to the island from Venezuela and established treaty with Spain, signed in 2010. Complementing this, are treaties themselves as Barbados’ first indigenous people. Barbados has with China, Qatar and Singapore, as well as Canada, the United since evolved and, from the standpoint of business, has established Kingdom and the United States. The ability to tap into other treaty itself as the international business nerve centre for the region and networks, like that of Panama, considerably increases Barbados’ the gateway to Latin America. The island has been a participant in flexibility and solidifies its position as the gateway to Latin America. F the international business and financial services sector for almost half of a century, designed as a low-tax jurisdiction with a network of double taxation and investment protection treaties, complemented by a wide range of products, services, incentives, and concessions. Venezuela was the first LatAm nation to engage with Barbados on tax treaty matters. The countries entered into both a double taxation agreement (DTA) and a bilateral investment treaty in the late 1990s. This was followed by Cuba. With the emergence of strong Latin American economic growth, Barbados has been intent on solidifying its position as the gateway to and from this important region of the Americas. In recent years, Barbados has concluded DTAs with Mexico and Panama. Other LatAm agreements are at various stages of negotiation, including those with Brazil, Chile, Colombia and Costa Rica. The Barbados Government recently announced the prospect of entering into negotiations with Guatemala, and it is felt that this trend will continue as Barbados continues its quest for hemispheric integration, building upon its role in the globalisation of the world’s economy. It is important to note that Barbados has maintained its reputation as a well-regulated international business and financial services centre. It was the only English-speaking Caribbean country placed on the original Organisation for Economic Co-operation and Development’s “White List” in 2009. This history has played an integral role in allowing Barbados’ LatAm treaty objectives to come to fruition, as it has permitted (or will permit) the removal of Barbados’ tax haven status in these jurisdictions. A case in point was Mexico several years ago, and in anticipation of the Barbados-Colombia agreement being concluded, Colombia placed Barbados on a limited carve-out list of tax havens in October 2013. A year later, Colombia removed Barbados from the black list altogether. LatAm related DTAs: • Brazil* • Chile* • Costa Rica* • Cuba • Mexico • Panama • Colombia* • Guatemala+ • Venezuela *negotiations pending +under consideration It is anticipated this trend will continue with the likes of Brazil and other treaty partners, who deem jurisdictions offering tax rates below a certain threshold as tax havens. Leveraging the Canada-Barbados Partnership Gildan Activewear is a Canadian company with its corporate headquarters located in Montreal, Quebec, Canada. Leveraging the long-standing partnership that exists between Canada and Barbados, Gildan began operating in Barbados in 1999. Gildan is a leading supplier of quality branded basic family apparel, including T-shirts, fleece, sport shirts, underwear, socks, hosiery and shapewear. The company sells its products under a diversified portfolio of company-owned brands, including the Gildan®, Gold Toe® and Anvil® brands and brand extensions, as well as the recently acquired Secret®, Silks® and Therapy Plus™ brands. The company also has licenses for the Under Armour®, Mossy Oak®, and New Balance® brands. Gildan has over 41,000 employees worldwide and its products are sold in over 40 different countries around the world. From our Barbados office, we manage Sales, Marketing, Operations and Sales Support functions for the corporation, including Customer Service, Credit Collection, Production Planning, Sales Forecasting, Inventory Management and Distribution of our products around the world. Additionally, there are other administrative functions that support the business, such as Human Resources, Information Technology, Legal and General Accounting. In Barbados, Gildan has found a very stable system of Government and a highly educated, ethical and committed workforce. In addition, the country provides reliable connectivity and infrastructure to support the global business. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  9  

10) International Business The OECD's Tax Avoidance Focus Globally Connected, by W ay n e lovell G lobalisation has brought many benefits, including cross-border trade, efficiency, and the free movement of goods and services. Some argue that it has also encouraged multinational corporations (MNCs) and high net worth individuals to arrange their affairs so that taxable profits are reported in low-tax or zero-tax jurisdictions that have engineered their tax systems to facilitate avoidance of higher taxation. The resultant perceived erosion of domestic tax bases arising from this argument has generated an increasing focus on “unfair” tax avoidance. Across the globe, tougher legislation and regulation, as well as more cooperation between tax authorities, are the new norm. The Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) project and the move to Automatic Exchange of Information (AEOI) are key drivers of these changes. MNCs Not Paying Enough Taxes? The underlying perception behind this OECD-led new focus is that MNCs are not paying their fair share of taxes. This perception is Internationally Respected. rooted in the belief that the only reason MNCs establish structures in low-tax jurisdictions is to achieve an artificially low effective rate of tax in respect of their worldwide operations. However, this ignores the fact that there are a number of non-tax reasons for MNCs to For over thirty years, Chancery Chambers has been providing comprehensive legal services in Barbados and across the globe. Our relationships with firms worldwide ensure informed service. Special practice areas include: Banking and Finance, Mergers and Aquisitions, Trusts and Estate Planning, Charities, Insurance, and Environmental Law and Policy. Learn more about us at www.chancerychambers.com utilise an international financial centre, such as Barbados, through which to hold their foreign investments. For example, a number of MNCs have established their holding companies in Barbados to hold their investments in Venezuela. The main reason for this is to take advantage of the protection afforded by the bilateral investment treaty (BIT) between Barbados and Venezuela. The fact that Barbados has a double taxation treaty with Venezuela, which provides reduced withholding tax on dividends paid to the holding company and no tax in Barbados on such dividends because of the participation exemption, is an additional bonus. In recognition of the importance of BITs to foreign investors investing in certain countries, Barbados has, to date, BITs in force with eight countries besides Venezuela, including China and Cuba. In addition, studies have shown that, far from encouraging “unfair” taxation, the use of IFCs such as Barbados by MNCs can, in some CHANCERY HOUSE High Street, Bridgetown, Barbados cases, ultimately result in increased employment benefits in their Tel: + ( home countries. Canada has often been cited as a good example of 6) - Fax: + ( 6) - 6 10  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 this. 

11) International Business How Does BEPS and AEOI Affect Barbados? One of the objectives of the OECD’s BEPS project is to ensure that transfer pricing outcomes are in line with value creation, and that MNCs provide relevant governments with details of all operations, revenues and taxes paid, according to a common reporting standard. It is interesting to note that the Barbados Income Tax Act contains certain anti-avoidance provisions which would cover transfer pricing irregularities and deem transactions between related parties to have taken place at a price equal to fair market value. These provisions are consistent with the objectives of the BEPS project in relation to transfer pricing. AEOI seeks to promote exchange of information (EOI) on account holders with multiple residences. Barbados completed protocols to a number of its existing double taxation treaties to bring the EOI article up to the standard established by the OECD. The Barbados Government has also indicated its intention to sign on to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and has also signed a Foreign Account Tax Compliance Act IGA Model 1 Agreement with the USA. These initiatives demonstrate Barbados’ commitment to be fully compliant with the new international standards in relation to tax matters. Barbados’ commitment is to facilitate international business and help MNCs compete better internationally ... Another consequence of the international initiatives outlined above, is that MNCs which utilise IFCs to structure their cross-border operations will need to ensure they have the requisite substance in the relevant jurisdiction to support the profits reported as being earned in that jurisdiction. Barbados, because of the quality of its labour force and access to higher education, has the appropriate infrastructure to enable MNCs to put in place the substance required to justify the profits reported as having been earned by their operations established in the jurisdiction. Conclusion Barbados’ commitment is to facilitate international business and help MNCs compete better internationally, while at the same time ensuring that its laws are fully compliant with the new international standards designed to combat tax evasion and money laundering. F 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  11  

12) International Business Canadian Financial Institution Regulation - Ensuring Barbados' International Business Companies Fit by aliso n ma n z er F inancial institutions in Canada operate under the regulation and supervision of the Office of the Superintendent of Financial Institutions (OSFI). On 28 January 2013, the OSFI issued the final version of its revised guideline on corporate governance. This revised guideline sets out OSFI’s expectations for corporate governance for all federally regulated financial institutions and applies to all such institutions. A key feature is that financial institutions are required to develop and implement a board-approved risk appetite framework that is enterprise-wide and tailored to all of its domestic and international business activities and operations. This requires a risk management system that links information on different risk types for all jurisdictions, to provide a holistic … financial institutions are required to develop and implement a boardapproved risk appetite framework that is enterprise-wide and tailored to all of its domestic and international business activities and operations perspective on risk exposures. If a business unit, in this case the Barbados international business company (IBC), is of a nature which allows the financial institution Barbados. A stable and consistent environment for the operation of to regulate compliance with its enterprise risk management policy business units, particularly those operating in foreign jurisdictions, on a consistent basis, this will provide significant benefit to the will be a significant aid to implementation and oversight of Canadian institution and enhance the likelihood of choosing enterprise risk management policies and practices. Jurisdictions IMAGE HERE 12  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

13) International Business which can deliver this consistency will be a superior choice for enterprise-wide policies and oversight as the similarity of regulation, business units and business activity. reporting and accounting in Barbados will fit readily with the Enterprise risk management requires enterprise-wide enterprise-wide requirements for Canadian financial institutions. assessment and controls. Controls will generally need to operate, particularly for larger financial institutions, using automated, corporate group, allowing ownership to provide direction and technology-based delivery of information on a two-way basis, guidance through a board of directors under the control of the relating to the ongoing assessment of risk and compliance with Canadian financial institution, also greatly assists in integrating the the enterprise risk management policies. Barbados must deliver Barbados IBC into the Canadian financial institution’s enterprise. the ability to track and log issues, as well as prepare and undertake The maintenance of the permitted ownership and direction of the remediation plans for effective enterprise risk management. corporation is a key factor in allowing Canadian financial institutions A key factor to enterprise risk management is ensuring to readily choose Barbados as a jurisdiction in which they can appropriate levels of compliance training are available throughout operate business units and meet their risk management compliance the organisation. Barbados has the ability to provide this compliance requirements. F The ability to have suitable ownership structured within the and translate the requirements into consistency and regulatory approaches - valuable attributes for those jurisdictions looking to attract Canadian financial institutions to open business operations. The continued enhancement of both IBC legislation and financial institution regulation in Barbados will establish the island as a key and effective choice of jurisdiction for offshore operations by Canadian financial institutions. The ability to consistently integrate Barbados into enterprise-wide policies, practices and procedures as a consequence of the ready recognition of those requirements in Barbados and the similarity of the Barbados legal and business environment, aids in choosing it for offshore activity. Barbados’ active involvement in meeting international standards for regulation of its financial services sector will also enhance The DGM Distinction  Investment Advisory and Brokerage  Global Custody and Foreign Exchange  Captive Insurance and Company Management  Trust and Corporate Services Tel: 1 (246) 434 4850 Toll Free: 1 (877) 360 0346 www.dgmbank.com  Family Office Management  License Applications for International Banks and Insurance Companies  Immigration Applications Security and Trust You Can Bank On 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  13  

14) International Business Latin America - Opportunities for Barbados by L i z a H arridyal - S odha I nvest Barbados’ Latin American (LatAm) conference, hosted also reacquainted with Barbados’ traditional planning vehicles, in Barbados during October 2014, was the flagship event for including Domestic Companies (with a focus on the tax credit International Business Week (IBW). The mantra of the IBW available where income is generated from outside of Barbados), conference was that private wealth in Latin America continues to International Business Companies, Societies with Restricted Liability, grow, with significant rises seen in 2013/2014, despite volatility Captive Insurance Companies, International Banks, and External and currency devaluation in certain LatAm countries. The LatAm Companies. They learned about Barbados’ strong regulatory regime conference welcomed professionals from several LatAm countries, which is supervised by the Central Bank and the Financial Services including Brazil, Colombia, Costa Rica, Mexico and Panama, to Commission. Additionally, they were provided with details on the capitalise on a tremendous opportunity for open dialogue with wealth management options available, as well as the stability and their Barbados counterparts and learn more about the benefits of capability of our banking system. using Barbados in meeting their clients’ wealth management and international business needs. LatAm professionals are more frequently seen to be utilising Barbados' trust structures, and of particular attraction is the asset protection which has been enshrined in our legislation Many LatAm economies continue to flourish and, in particular, LatAm clients remain interested in building their real estate both Brazil and Mexico, important markets for Barbados, saw holding portfolios outside of their jurisdiction, and Barbados is growth in private wealth. Statistics also indicate that offshore currently vigorously pursuing the development of a real estate wealth is growing significantly, originating mainly from Argentina investment trust vehicle. LatAm professionals have generally used and Venezuela. Barbados for captive insurance companies, and the statistics indicate What is it that attracts these wealthy LatAm high net worth that this trend has continued, particularly for those originating from individuals to Barbados? We can turn to our double taxation treaty Mexico. network, used as a gateway for LatAm clients to access our treaty strongly recommended that we enhance our product offering by partners. It is noteworthy that, recently, Barbados initialed a Tax implementing Incorporated Cell Company (ICC) legislation. This Information Exchange Agreement with Colombia and was is currently under urgent consideration. The structural framework consequently removed from its blacklist. Barbados is in an of an ICC is similar to the Segregated Cell Company (SCC), with a enviable position, since its LatAm neighbours cannot boast of an single core and any number of cells. However, the critical distinction expansive treaty network and the benefits which LatAm clients is that an incorporated cell of an ICC, unlike a segregated cell of stand to gain through proper structuring vehicles. a SCC, is a separate legal entity with all the legal attributes of a LatAm professionals are more frequently seen to be utilising corporation. Barbados’ trust structures, and of particular attraction is the asset protection which has been enshrined in our legislation. Settlors of is no longer a case of venturing into the unknown. Our LatAm trusts now have the ability to reserve certain powers, which was colleagues continue to tell us, unequivocally, what Barbados needs traditionally only given to trustees, and this gives LatAm clients to do to attract and maintain LatAm business, and to openly discuss greater control over their assets and, undeniably, the reassurance the advantages of living and working in Barbados. They need a and comfort which ensues. While this legislative change has widened well-regulated jurisdiction, diversity in product offerings, ease of the reach for Barbados, we continue to perfect our Private Trust doing business, and they want to deal with educated professionals. Companies and Foundations legislation. Our LatAm visitors were Barbados has all of these attributes and more. F 14  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 Indeed, our LatAm counterparts (among others) have Marketing to, and transacting business with, LatAm professionals 

15) International Business Base Erosion and Profit Shifting - the Impact on International Financial Centres by iki n s clarke G overnments in the G-20 countries have stepped up their financing arrangements, updating transfer pricing documentation efforts to halt the flight of investment and capital or even changing IT systems. It will be essential to keep abreast to countries with attractive low or zero-tax regimes. with the ongoing developments. International financial centres (IFCs), such as Barbados, that depend Internationally, tax authorities are analysing data to highlight on the economic activity from foreign direct investment, are caught the key drivers of base erosion. up in the dynamics of proving that it is legitimate when multinational is auditing a number of companies to ensure that there is no corporations choose them as headquarters. misuse of tax rules. The G-20 countries have introduced legislation designed to double non-taxation of interest and mismatching of hybrid prevent multinationals from shifting profits offshore and to ensure instruments. that their high net worth individuals pay more taxes at home. The do so where it can be shown that the company earning the interest United States was first, with its Foreign Account Tax Compliance Act income will pay tax on that income. (FATCA) legislation, closely followed by the United Kingdom and companies using debt to finance production of exempt or deferred others with similar legislation aimed at recouping more taxes for income. their treasuries. capitalisation ratio and restricted foreign-owned companies from The Organisation for Economic Co-operation and Development obtaining debt which is used to finance subsidiaries in other (OECD), which is often seen as an advocate for the G-20 countries, jurisdictions. has been busy setting guidelines on how to combat base erosion Tax revenues from multinationals contribute significantly to the and profit shifting (BEPS), with the aim of curbing multinational tax gross domestic product of IFCs and these revenues form the basis avoidance and offshore tax evasion in developing countries. BEPS is for long term development. How IFCs respond to the BEPS project defined by the OECD as the use of tax planning strategies to exploit will be determined by how nimble they are in dealing with the gaps and mismatches in tax systems, to make profits ‘disappear’ or following: to shift profits to locations where there is little or no real activity, but Ineffective tax audit capacity – IFCs are often unable to monitor the taxes are low, resulting in little or no corporate tax being paid. cross-border tax planning structures to determine consistency with The OECD considers that national tax laws have not kept pace with global tax rules; global corporations, fluid capital and the digital economy, and that Limited tax legislation – In most IFCs there is a lack of legislation this gap can be exploited by companies which avoid taxation in that deals with certain risks associated with profit shifting, such as their home countries by pushing activities abroad to IFCs. transfer pricing and thin capitalisation rules; The OECD has identified the following action plans with a view Access to information – Not all IFCs have adequate information to changing how tax authorities design and interpret tax laws and systems to facilitate the gathering and retention of information to treaties: keep pace with the changes in global taxation and information • Address the tax challenges of the digital economy exchange; • Neutralise the effects of “hybrid mismatch” arrangements Technical know-how – The interpretation and implementation of • Strengthen “controlled foreign corporation” rules international tax rules and solving tax disputes demand specific • Limit interest deductions and other financial payments skills. However, the competencies of staff in many of the tax • Counter “harmful tax practices” authorities of IFCs may not be up to the required level; • Prevent treaty abuse Political will – Governments in IFCs will be faced with the • Prevent the artificial avoidance of “permanent establishment” dichotomy of attracting foreign direct investment while facilitating (PE) status legislative changes to deal with BEPS. Where resources are deployed • Address harmful transfer pricing practices relating to intangibles will depend on political will and awareness. The Australian Taxation Office France and Mexico have targeted the Companies deducting interest expense can only The focus is to prevent The Canadian tax authorities have reduced their thin • Enforce disclosure of aggressive tax planning arrangements. Summary The BEPS Impact The key message is that BEPS will force IFCs to implement systems BEPS will create additional tax obligations especially for countries that lend to substance. No longer will merely incorporating a company where tax systems are not robust. Taxpayers can expect reduced and having board meetings be acceptable to establish substance. interest payment deductions, critical transfer pricing adjustments, Multinational companies need to demonstrate that they have the creation of new permanent establishment status and increased sufficient economic substance in the form of maintenance and scrutiny under anti-avoidance rules. It will be necessary to adapt. management activities over assets owned or attributed to companies This may take the form of corporate reorganisation, revising in IFCs. F 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  15  

16) Domicile Focus Transparency in a Changing International Landscape by sir trevor carmichael , q . c . T raditionally, as a low-tax jurisdiction, Barbados has never Epilogue acknowledged itself to be part of the “uncooperative tax In the final analysis, the new transparency is still integrally linked havens”, as listed by the Organisation of Economic to the old trust which underpins all relationships; the transparency Co-operation and Development over the past 10 years in its primary and which increases sales and creates investor comfort. It is the trust of revised lists. For, despite random listing and delisting, the jurisdiction which Leonard Bernstein speaks when referring to Beethoven’s has always been one of transparency and generally low taxation Fifth Symphony in The Joy of Music: within its international business sector. It has relied on a policy of “The key to the mystery of a great artist: that for reasons unknown to him or propelling growth through the rapid extension of its double tax treaty to anyone else, he will give away his energies and his life just to make sure network. Indeed, the presence of such a network has allowed for that one note follows another inevitably … the composer, by doing this, leaves international tax structuring, with results, in some cases, of tax us at the finish with the feeling that something is right in the world, that deferral and low tax payments; but it has clearly discouraged something checks throughout, something that follows its own laws tax evasion. Furthermore, its treaties contain the standard exchange consistently, something we can trust, that will never let us down." F of information provisions; and while such exchanges may never be fishing expeditions, as long-established in law, they do provide for the routine exchanges. Moreover, from as early as 1986, the jurisdiction had additionally signed a Tax Information Exchange Agreement with the USA as part of the Caribbean Basin Initiative. Since 1998, the international financial services landscape has been painted with a plethora of reports and recommendations from international and regional groups which seek to ensure global transparency. The international regulatory ethos has, however, undergone steady changes, and particularly since the 2008 financial crisis and accompanying recession. This new age of disclosure and transparency has been significantly fuelled at the national level by the recent policies instituted by the USA and A Bright Future in Barbados Aon Insurance Managers (Barbados) Ltd. (AIM(B)) was one of the first management companies to be established in Barbados after the Exempt Insurance Act was passed in 1983. spurred on by its protocols: the 2011 Overseas Voluntary Disclosure Initiative (OVDI), and the 2009, 2013 and 2014 Overseas Voluntary Disclosure Programmes (OVDPs), the latter of which has no set deadline for compliance, since “the terms of the programme may change at any time”. They are mirrored by the Foreign Account Tax Compliance Act, which institutionally buttresses the OVDI and OVDP protocols. These three protocols have coalesced in such a manner as to encourage similar legislation in virtually all jurisdictions which have a trade, economic or political relationship with the USA. In essence, the global exchange of information has taken on a different legal and practical character from the protocols hitherto accepted in international tax practice. Within this current milieu, the Barbados response must yet again be one of reviewing its own internal processes, bearing in mind that investors will continue to look at substance and not form. Furthermore, the dynamic nature of the new transparency, globalisation, free trade agreements, the fast-moving information industry and all of the other global developments, require Barbados to retool its ongoing international strategies. In this regard, the recent efforts to be host to a regional centre for dispute resolution, is an important strategic objective in a growing services area. Barbados must also rethink its role as a potential regional centre for philanthropy and continue on an ongoing basis to buttress and improve its own non-profit and charity legislation. 16  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 Now, over 30 years later, we are still one of the leading Captive Managers and very happy to be here. Initially formed in Barbados in 1984, AIM(B) is a wholly-owned subsidiary of Aon PLC (Aon). AIM(B)’s Barbados office has 11 employees. It is one of 33 similar operations, in 33 jurisdictions around the world, which form the Aon subgroup - Aon Captive Insurance Managers. Our firm manages a diversified portfolio of captives covering all aspects of property, marine, liability and other specialty risks for multinational single parents, associations and privately held companies of Canadian, US and Latin American origin. The provisions laid out in Barbados’ captive insurance legislation help our clients to carry out these operations efficiently and cost-effectively. AIM(B) predicts a bright future in Barbados. The location has obviously worked for us and our clients, and we look forward to continuing our relationship with a jurisdiction that for several decades has proven to be a leading domicile for captives. 

17) Domicile Focus Why Barbados - Its Five Key Strengths by co n n ie smith A t last count, there were approximately 100 countries around demands. It has listened and responded rationally when lawmakers the world operating as international business and financial in the USA and Canada, along with other countries within the services centres, Barbados being one. Organisation for Economic Co-operation and Development, claimed On the surface, these centres share the same basic value that international financial centres help companies and wealthy proposition – a low-tax jurisdiction that companies based in other individuals keep their earnings out of the taxman’s reach. countries can use to increase their competitiveness. But below the surface there are varying degrees of integrity in how these Account Tax Compliance Act, which stipulates that the island’s jurisdictions are run. To reduce risk, investors need to choose financial institutions must report the assets of US citizens. The wisely and separate the wheat from the chaff. Barbados and US governments have already signed a Model 1 Inter-governmental Agreement to this effect. All jurisdictions have their laundry list of features and benefits, Barbados has also acknowledged the reality of the US Foreign but there are five benefits that investors should consider to be paramount, and Barbados provides all of them. Certainty For more than 40 years, Barbados has provided a level of certainty of which few jurisdictions can boast. A former British colony, its laws are deeply rooted in English jurisprudence. Its Companies Act is closely modelled on that of Canada. To dispel any claim of financial secrecy and tax evasion, the island has maintained transparency through the use of double ... there are five benefits that investors should consider to be paramount, and Barbados provides all of them taxation agreements (DTAs). It has painstakingly constructed a network of such treaties with 34 countries, and another 11 are in the pipeline for finalisation. In Barbados, the rules of the game are Quality of life well established and the boundaries clearly marked. Many investors want a jurisdiction where they can set up an international entity and live there comfortably as well. Barbados Political stability offers these business owners – and their employees – a quality of Political stability surely comes next, and Barbados has an enviable life that no other jurisdictions in the region can match. reputation internationally in this regard. Indeed, the “Barbados The United Nations Development Index rates Barbados ahead model” has been long admired by the rest of the Caribbean. of many much larger Latin American and Asian countries, and Independent since 1966, but nevertheless proud of tradition, the considers it one of the most developed small island developing island has the third oldest parliament in the Western Hemisphere, states in the world. dating back to 1639. Political rhetoric aside, its elections are fair University of the West Indies campus, has produced a highly and peaceful. Anything less would be unthinkable to Barbadians. educated workforce and an ample supply of lawyers, accountants Its education system, which includes a and other professionals needed to service international businesses. Opportunity The best jurisdictions help to open up business opportunities for services, excellent infrastructure, as well as top quality properties investors; they act as portals to new markets. There is no and real estate developments. As one of the best known tourism jurisdiction in the Caribbean region that can play this role better destinations in the Caribbean, it can also boast of lifestyle than Barbados. Its network of DTAs spans the Americas. It reaches amenities and services that are world-class. Barbados can also boast a high standard of medical and social across the Atlantic to several countries in Europe and Africa, and even beyond to the Middle East and Asia. Through this network, Conclusion investors in these regions can efficiently and cost-effectively tap Barbados into many new markets and grow their businesses. responsiveness and an enviable quality of life. Clearly, the choice offers certainty, political stability, opportunity, facing investors is not so daunting after all. F Responsiveness Well run jurisdictions are responsive – they adapt to rather than resist inevitable change. Barbados has repeatedly displayed these qualities. It has continually updated its legislation to match 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  17  

18) Domicile Focus Barbados: Vital to Canada's Future Global Strategy by dr . walid heja z i I n 2013, the stock of Canadian investment into or through Barbados was CAD$62 billion, making it the third largest destination for Canadian outward foreign direct investment, following only the USA and the UK. The rapid growth in this figure has occurred despite increased scrutiny by Canadian and supranational authorities, such as the Organisation for Economic Co-operation and Development and the G-20. Furthermore, the rapid growth in the Canada–Barbados relationship is in sharp contrast to other offshore financial centres, particularly since the onset of the global financial crisis. The use of Barbados by Canadian companies has created 26,000 to 31,000 permanent additional Canadian jobs, which are associated with additional personal and corporate tax revenues for Canada Why has Barbados emerged as the premier offshore jurisdiction for Canadian corporations? Barbados and Canada enjoy a tax treaty which allows a preferred treatment for “Exempt Surplus”, but there are other reasons as well, including the following: • an extensive array of 34 double taxation agreements in force, allowing Canadian companies to set up in Barbados and to ‘hub’ their international strategies • nine Bilateral Investment Treaties further enhance its attractiveness as a conduit • a Commonwealth country with a parliamentary democracy similar to Canada’s own • a strong legal system and rule of law, based on English Common Law • a safe and high-quality environment with a low crime rate, making it very attractive for expats and their families as a place to work and live • one of the most highly educated countries in the world and the best educated within the Caribbean. Collectively, these are critical in explaining the importance of Barbados as a conduit for international expansion and trade for Canadian companies. 18  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

19) Domicile Focus What are the effects of this increased use of Barbados by Canadian companies on Canada? It is well established that when Canadian companies invest internationally, this serves as a beachhead of sorts for Canadian exports. The Canadian subsidiary overseas imports technology, intermediate inputs, and human capital from Canada. Furthermore, the presence of Canadian companies abroad enhances network and information flows, which serve to lower the costs of doing business internationally. That is, Canadian business activity abroad serves to complement Canadian exports to those third markets. There are many theoretical reasons to expect that the complementary effects would be higher when Barbados is used as a conduit. Canadian companies experience a significant reduction in the cost of capital associated with the tax treaty. Also, access to the attractive local environment enhances the efficiency, transparency and effectiveness of the move into international markets. These benefits offset the additional costs of moving into international markets, particularly those which are less familiar and more risky than Canada’s traditional trading partners. When Barbados is used as a conduit jurisdiction, the additional impact on Canadian exports is estimated to be CAD$2.171 billion to developed countries, CAD$448 million to developing countries, and CAD$956 million to emerging markets. These additional Canadian exports result in the creation of between 26,000 and 31,000 additional full-time Canadian jobs. Implications for Policymakers The key message is simply this: because a tax advantage flows to corporations, using Barbados as a conduit jurisdiction does not mean these activities are bad for the Canadian economy. The key benefits to Canada and Canadian companies must be taken into account in any public discussion of the merits of the use of conduits – having access to Barbados as a conduit to the global economy is fundamental and vital to Canada’s global business strategy. The results of my research indicate that the Canadian government should encourage a deepening of the Canada-Barbados relationship, so as to further enhance the competitiveness of the Canadian economy. F 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  19  

20) Domicile Focus The Foreign Account Tax Compliance Act and its Implications for Barbados B Y bruce z agaris Background the Treasury/IRS expects that the restrictive jurisdiction will have On 1 July 2014, the Foreign Account Tax Compliance Act (FATCA) signed an IGA, or will have otherwise modified its domestic law, or was implemented and covered Foreign Financial Institutions (FFIs), that the FFI group will have changed its business in that country. primarily banking and financial institutions. Final Regulations The FATCA regulations extend the advantages for financial institutions operating in jurisdictions with inter-governmental agreements (IGAs). The final regulations keep 31 December 2015 as the transition period for the requirement that all members of an expanded affiliated group be a participating or deemed-compliant FFI. The transition The goal of the CRS is to provide one standard that jurisdictions wanting to engage in automatic exchange can use ... period addresses circumstances in which an entity within an expanded affiliated group encounters restrictions under local law. During the transition period, a branch or affiliate of an FFI, in a The decision not to liberalise the affiliated group requirements or jurisdiction that prohibits the reporting or withholding required by extend the transition period beyond 2015, imposes pressure on FATCA, does not prevent the other FFIs within the same group from multinational financial institutions to operate only in jurisdictions concluding an FFI agreement. At the end of the transition period, with FATCA IGAs. 20  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

21) Domicile Focus The final regulations keep the 10% threshold for purposes of Implications for Barbados classifying an individual as a substantial US owner. The 10% The Barbados-USA IGA benefits Barbados: it eliminates USA threshold provides an advantage to an FFI operating in a jurisdiction withholding on payments to FFIs established in the FATCA with an IGA, since FFIs in jurisdictions with an IGA can rely on partner; it identifies specific categories of FFIs established in the anti-money laundering and know-your-customer rules, which usually FATCA partner that are treated, consistent with IRS guidelines, as have a 25% threshold. deemed compliant or presenting a low risk of tax evasion; it Barbados’ IGA with the USA makes the domicile attractive to relieves FFIs established in Barbados from terminating the account financial institutions which want a jurisdiction to which the more of a recalcitrant account holder; it relieves FFIs from imposing flexible rules apply. pass-through payment withholding on payments to recalcitrant account holders; and it imposes pass-through payment withholding New Reporting Standard on payments to other FFIs organised in the FATCA treaty partner, On 13 February 2014, the Organisation for Economic Co-operation or in another jurisdiction with which the USA has a FATCA and Development unveiled the Common Reporting Standard (CRS) implementation agreement. for automatic exchange of tax information. It calls on jurisdictions to obtain information from their financial institutions and exchange services community that deals with US clients, taxpayers, and that information automatically with other jurisdictions on an assets or any transaction cleared in the USA. The breadth of FATCA annual basis, and emulates the FATCA IGAs. and potential costs, burdens and complications make clarity and certainty important from an economics perspective. The goal of the CRS is to provide one standard that jurisdictions These commitments provide significant clarity for the financial wanting to engage in automatic exchange can use in order to avoid A burden imposed on Barbados is that it requires Barbados to a proliferation of different standards, which would increase costs for receive the FATCA reports and forward them to the USA. Hence, both governments and financial institutions. Barbados has had, and will continue to bear additional financial The G-20 has asked the Global Forum to establish a mechanism and human resource costs in implementing the FATCA IGA. to monitor and review the implementation of the new global However, Barbados will have a head start on the inevitable costs of standard on automatic exchange of information (AEI), setting the preparing for the global AEI. F stage for potential countermeasures if countries do not meet the new global standard. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  21  

22) Domicile Focus Choosing a Domicile - an Emerging Country Perspective by D omi n ique pepi n & maria robi n so n L ike saplings pushing their way up from the forest floor, scanning the globe in search of the right international business and emerging countries around the world are eagerly seeking a financial services centre and, increasingly, their gaze is settling on space in the global economy. If they can claim their share of Barbados. sunlight, their economies will grow quickly and their societies will Not surprisingly, given their geographical proximity, it is the benefit. However, such growth requires a favourable environment emerging countries of Latin America that are examining the island that offers affordable access to international markets. most closely as a regional hub for both inbound and outbound To this end, business leaders in these emerging countries are investment. … emerging countries are scanning the globe in search of the right international business and financial services centre and, increasingly, their gaze is settling on Barbados Over the past 40 years, the island has built a well deserved reputation as a highly attractive jurisdiction for carrying on international business. Indeed, in structuring their international transactions and investments, multinational corporations have long made use of the tax advantages and other benefits created by the suite of corporate entities that Barbados offers. These entities include International Business Companies, International Societies with Restricted Liability, International Financial Services Companies, Exempt Insurance Companies and Qualifying Insurance Companies. Another attractive feature of the island jurisdiction is Barbados’ network of double taxation treaties (DTAs) with other countries, Barbados: a Compelling Choice Clarity Life is an international life insurance company based in But what sets Barbados apart from other jurisdictions is the Barbados. It provides insurance solutions for high net worth outstanding professional standard of its service providers, individuals worldwide. including actuaries, bankers, accountants, lawyers, compliance We decided to incorporate in Barbados and establish our managers and administrative personnel. They are well educated, headquarters here, having reviewed several jurisdictions. Some knowledgeable, capable of thinking ‘outside the box’ and are of the factors that particularly impressed us about Barbados, friendly and responsive. and which led to our decision include: Generally, the same applies to the government’s business • its ease of access for our shareholders and clients located, facilitating agencies. Employees are professional and eager to for example, in Europe, the Middle East and the USA facilitate business on the island without compromising • access to the South American market • its many bilateral investment protection agreements international standards of business practice. Finally, who can beat the average Bajan’s friendly disposition? Barbados also has many beautiful beaches, hotels and resorts, • the availability of professionals who speak not only English, plus first class local and international cuisine. Needless to say, but also French or Spanish. Board meetings in Barbados are a real pleasure! 22  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

23) Domicile Focus which currently totals 34 treaties, with several more treaties For example, Barbados, as a jurisdiction, can play a significant role pending. This DTA network, which includes treaties with countries in structuring investment into the oil and gas sector in Mexico, such as Cuba, Mexico, Panama and Venezuela, makes Barbados which is currently undergoing reform, thereby potentially particularly attractive to those jurisdictions without similar treaties reducing the tax profile of such investment by a significant between themselves, as they can conduct business with each other margin. Similarly, a Barbados entity may also be easily used while making use of the island’s treaties. to hold investments in Central America. As emerging countries look for the right international business Making the island an attractive partner in this development has jurisdiction, there are critical factors other than tax incentives on been a long term goal for the Government, which has been working their check list, and Barbados possesses many of the requisite hand-in-hand with the professional services firms on the island in criteria. Among the major benefits and assurances offered by the order to enhance the country’s reputation. For instance, new island are its: legislation has been introduced to specifically cater to the Latin American market - the Foundations and Private Trust Companies • long-standing tradition of a stable political climate, including democratic elections and government Acts and the expansion of the Qualifying Professional Services listing for obtaining the foreign currency earnings credit - are recent examples. • sound and respected legal framework based on British common law • commitment to international business and ease of doing business • highly developed infrastructure and information technology capability, and There has been a growing presence on the island of Spanishspeaking nationals, businesses and service providers, as more and more entities headquartered in Latin America recognise Barbados as the international business and financial services centre of choice for their investment needs. Before too long, “Buenos Dias” may be a familiar greeting in Barbados. F • educated workforce. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  23  

24) Domicile Focus The Barbados Stock Exchange - Opportunity Knocks by marlo n yarde T he International Securities Market (ISM) is on the cusp of • Create a one-stop-shop for new and/or prospective International being launched in the Barbados capital market, as its Rules Business Companies (IBCs) interested in incorporating in are in the final stages of being approved by the Financial Barbados, as well as raising capital for operations or expansion Services Commission (FSC) of Barbados. Once the Rules are approved, the ISM will be launched. The ISM is, perhaps, the • Allow existing IBCs to utilise a facility to raise capital in a missing pillar in Barbados’ International Business and Financial jurisdiction with which they are already familiar Services (IBFS) sector. Other pillars include: • Give non-traditional IBCs that often have non-traditional sources • reliable information technology and travel networks of finance in the form of venture capitalists and angel investors a viable exit strategy, as well as expose these individuals and • a sound legal system with no restrictions on foreign ownership organisations to Barbados’ growing entrepreneurial sector, which could also benefit from these sources of finance. • favourable taxation • an expanding network of double taxation agreements • a highly educated and skilled workforce • a well-regulated financial services sector, represented by international banks and insurance companies, trusts and mutual funds. The ISM is, perhaps, the missing pillar in Barbados' International Business and Financial Services (IBFS) sector Barbados’ financial services sector is supported by brokers, lawyers, accountants and service companies. With the launch of Barbados has a responsive and sound regulatory framework the ISM, the IBFS sector will be complete and strengthen the encompassing transparency, efficiency, fairness and equality. It is nation’s status as an internationally competitive and attractive built on firm legal principles, including the “rule of law”. The BSE jurisdiction. believes the ISM will significantly enhance Barbados’ position as a In developing the ISM’s Rules, the Barbados Stock Exchange Inc. premier location for facilitating international business. F (BSE) benefited from studying the requirements of international participants, whilst at the same time keeping an eye on international “agenda setters”, such as the G-20 and the Financial Stability Board, and “sectoral standard setters”, such as the International Organisation for Securities Commissions’ (IOSCO) best practices and standards. The FSC is an “ordinary member” of IOSCO. The ISM is a dedicated market for the listing and trading of securities of issuers incorporated in Barbados that would otherwise be listed and traded on other exchanges around the world. It will operate as a separate market of the BSE, a self-regulatory organisation, with its own trading rules for both participants and listed companies. The ISM will attract member participants from the local brokerage community as well as existing and new international offshore banks, international business entities and international securities dealers. The establishment of the ISM will also: • Add credence to an already well established IBFS sector and support Government’s thrust towards promoting Barbados as a premier location to do business 24  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 The three categories of Members or Participants in the ISM are: • Trading Participants • Clearing Participants • Listing Sponsors. The ISM will, in the initial stages of operation, list and trade the following securities: • Equities • Bonds and other fixed interest securities • Mutual Funds. 

25) Domicile Focus The Barbados "Africa Project": An Update by fra n Ç ois E he n dy B arbados’ “Africa Project” began almost 14 years ago, when deliberate political and diplomatic efforts were made to Barbados engaged each of these new members about concluding Pursuant to the execution of its “Africa Project”, not only has conclude economic instruments with strategic African states. a tax treaty, but in each case the response has been positive with The dividends were both tangible and swift. Moreover, in addition work underway to confirm dates for the start of formal tax treaty to tax treaties with Botswana, Ghana, Mauritius, Rwanda and the negotiations. Seychelles, bilateral investment agreements were also concluded It is expected that Africa’s combined gross domestic product with Ghana and Mauritius. will top US$3 trillion by 2018, compared to just over US$2 trillion More recently the “Africa Project” has given rise to a number currently. F of new tax treaties with countries in the Middle East/North Africa region, including Bahrain, Qatar and the United Arab Emirates. In addition, Saudi Arabia has also agreed to negotiate a tax treaty, with dates for the formal round of talks to be confirmed on both sides. As an unexpected, but welcome bonus of Barbados’ stepped-up diplomatic activity to interest more African states in tax treaty negotiations, not only has the country been able to engage several non-traditional partners in the Gulf region, but Barbados’ tax treaty ‘footprint’ was made larger in Europe through new agreements with Belgium, the Czech Republic, Iceland, Italy, Portugal, San Marino, the Slovak Republic and Spain. In equal measure, spin-offs of the “Africa Project” have also seen our network of tax treaties expand to Malaysia and Singapore, while a new treaty with Vietnam is awaiting signature. Closer to home, Barbados added tax treaties with Mexico and Panama to its long-standing treaties with Cuba and Venezuela. Together – particularly the agreement with Mexico – these treaties have opened a new two-way investment portal between Latin America and Barbados. Added to this is the fact that, when tested, our bilateral investment treaties with Cuba and Venezuela have withstood scrutiny, and have provided the investment protection which serves to mitigate the political risks associated with foreign direct investment. While the “Africa Project” has yielded results in geographical areas outside of the Continent, recently there has been a surge in tax treaty ‘traffic’ directly with Africa. This ‘windfall’ for Barbados has come as a direct result of the G-20 mandate that information exchanges of confidential taxpayer information should no longer be premised on bilateral exchanges “on request”, as provided for in tax treaties and tax information exchange agreements, but on automatic exchanges, the legal basis of which is to be found in the Organisation for Economic Co-operation and Development’s (OECD’s) Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This sanction-based imperative for all countries to start automatic exchanges by 2018 has led to a significant uptake of new members of the OECD Global Forum. The new African members of what is now the largest international tax organisation in the world include Burkina Faso, Cameroon, Gabon, Kenya, Nigeria, Providing Quality Services to Clients Globally The Blue Financial Group comprises a Barbados licensed Trust Company, a licensed International Bank and a Corporate Management firm. We have a team of 19 employees who are dedicated to delivering personalised, high quality services to our clients from around the world. Since commencing operations in 1987, we have viewed Barbados as the premier jurisdiction in the Caribbean from which to offer our services. Our belief in quality over quantity, and a focus on transparent structuring and tax planning, is aligned with the standards for which Barbados is known. Barbados continues to be an attractive jurisdiction for Canadian corporations requiring a stable and tax-neutral jurisdiction in which to establish subsidiaries for their international operations. The Blue Financial Group enjoys working with these corporate clients and, as a result, we continue to be based in Barbados. Barbados is also receiving increased interest from Latin American investors. The country’s growing list of double taxation treaties positions Barbados as a lower cost and transparent alternative to some European domiciles which many wealthy Latin American families historically use. These facts, coupled with our presence in Latin America, make Barbados an ideal jurisdiction from which to offer our services. Rwanda and Senegal. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  25  

26) International Insurance Steady Growth makes Barbados a Captive Jurisdiction of Choice by R icardo K n ight & K irk C yrus A cccording to the Financial Services Commission, as of services. In support of this, Barbados offers financial, accounting, 31 December 2014, there were 189 active Exempt Insurance legal, trading information, administrative and other services that Companies and 42 active Qualifying Insurance Companies are deeply entrenched, of international class and competitively in Barbados. Of the total number, approximately 55% originated priced when compared to other IFCs. This is further enhanced by from Canada, with another 26% from the USA. institutional strength, social services and technological readiness. It is instructive that while Barbados’ Double Taxation Agreement (DTA) with Canada has been in existence since the 1980s, Canada has only been a party to Tax Information Exchange Agreements (TIEAs) with Bermuda and other jurisdictions since mid-2011. The informed view is that TIEAs, in their current form, are not as effective as DTAs as far as facilitating cross-border trade and investment, since they offer investors no protection from double taxation. The Barbados investment model has been carefully crafted and the jurisdiction continues to expand its network of DTAs, most notably in the Americas. Its tax treaty partners include Canada, China, Mexico, the UK and the USA, while negotiations are currently underway with Brazil and Colombia. This model has encouraged Canadian corporations with global operations to use Barbados for their captive insurance companies, so they can take a tax deduction for their insurance premium in Canada and still accrue tax-free income from the insurance business in Barbados under the right circumstances. The Barbados investment model has been carefully crafted and the jurisdiction continues to expand its network of DTAs, most notably in the Americas Enlightened legislation is anticipated in the Barbados insurance landscape, with the enactment of Incorporated Cell Company (ICC) legislation in the coming months. During 2013, there was a net growth globally of close to 250 captives, with almost two-thirds coming from the USA, where more than 30 states passed captive legislation with the widespread use of incorporated cell captives. Although Barbados is not expected to compete directly with these US states in a meaningful way, there is broad base appeal within Latin America as professionals there continue to increase the recognition and use of Barbados as a captive insurance jurisdiction. The proposed legislation allows for the incorporated cell of an ICC to be a separate legal entity that could enter into contractual arrangements with third parties in its own name, making the The continued growth of Barbados as an international financial structure appealing to the many privately held conglomerates in centre (IFC) will largely depend on its ability to facilitate Latin America. hemispheric integration with Latin American nations. Apart from Cuba, Mexico, Panama and Venezuela – all DTA partners already environment is one of arduous regulation in relation to international – Barbados also has diplomatic relationships with other key commerce and finance, with fervent competition amongst developed hemispheric countries, including Brazil, Chile, Colombia, Costa countries for a share of tax on the profits of international companies. Rica and Uruguay. It is widely accepted by the Organisation for Economic Co-operation There is no doubt that IFCs like Barbados can enable corporations and Development and others that Barbados continues to comply based in the Americas to increase their competitiveness in with the requirements for the exchange of information on request. international commerce and finance by locating aspects of their Barbados will continue to reinforce the message that it is not a tax business there. haven, but a jurisdiction with low taxation that is prepared to take This structure facilitates access to the global marketplace, while allowing for more competitively priced goods and 26  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 The path towards growth is not without challenges. The current responsibility for tax information exchange. F 

27) International Insurance The Role of the Financial Services Commission in a Changing Regulatory Environment by ra n dy graham T he main objective of the Financial Services Commission • have copies of financial records available for review by the (FSC) in Barbados is to promote stability in the financial Regulator. system. This is a task in which the FSC takes great pride, and all available resources are aligned to ensure that it is addressed Board meetings are held in the domicile, and oftentimes the Regulator with alacrity by its highly competent staff. In order to promote entertains meetings with directors on matters related to the financial stability, the FSC has sought to create a regulatory company. These actions, and more, are part of a pragmatic regulatory framework that is robust and meets best practice standards, whilst environment that lends substance to the activities of the entities always considering the markets in which entities operate. In its registered in Barbados. role, the FSC is also acutely aware of the need to balance quality The strong regulatory environment in Barbados is, therefore, a regulation with business facilitation, in order to create an positive for the country, since it promotes financial stability. It is environment in which measured growth is possible. also beneficial for companies which set up captives in Barbados, for a myriad of reasons, including the fact that they are seeking: In order to promote financial stability, the FSC has sought to create a regulatory framework that is robust and meets best practice standards ... • speciality line cover, which is difficult to obtain in the commercial market • an alternative to the commercial market, because of low probability of risk occurrence • access to the reinsurance market, and • to enter into other insurance markets. The highly trained staff and strong regulatory framework at the FSC are recognised globally. Registered companies can confidently In reviewing the regulatory framework which the FSC has designed, display the Barbados licence when seeking to conduct global it is worthy of note that the framework consists of right-sized business, because the Barbados licence is widely recognised and legislation, statutory filing requirements, onsite examination, respected. cross-border supervision, and entity level assessments that look Having regulated captive insurance companies for over 30 years, at the static position of entities as well as forecasted positions Barbados has used the knowledge gained to ensure that the registered based on the established trends. This framework is buttressed captives are appropriately regulated, but not onerously so, such that by an internal operational mechanism for ongoing review and facilitation is possible while promoting financial stability. Therefore, improvement of the regulatory system. in the face of growing global queries on the role of international Furthermore, the regulatory system encourages substance in the financial centres, we stand resolute to any and all assessments. The business activity conducted by regulated entities. International retention rate of our captive insurance sector remains very high, insurance companies and captive insurers registered in Barbados due mainly to the fact that the captives are conducting substantive can attest to this fact, both from the legislative framework and from insurance activity and the regulatory framework pushes companies the operational practices of the FSC. Companies are required to: to ensure they are appropriately structured as a going concern. As a regulator, the FSC commits to ensuring that the regulatory framework • submit business plans detailing the proposed insurance activity remains a robust one, and it is clear that existing and future when seeking licences captive insurers in Barbados will continue to benefit from the FSC’s unwavering commitment to being the best in the world at what • submit periodic statutory returns to the Regulator, which are, in we do. Captives registered in Barbados are in a well regulated and some cases, assessed by an actuary stable financial environment, ready to do business. F • have a principal representative in the jurisdiction who is responsible for the company’s affairs 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  27  

28) International Insurance The Popularity of Small Captives is on the Rise by trevor mappleb E ck & n icholas crichlow T he term “small Captive”, commonly referred to as an might be available in the domestic insurance market. Captives “831(b)” in the USA, reflecting the section of the IRS tax are also able to earn ceding commissions from reinsurers, which code, refers to a Captive insurance company typically can act as an income source created by midsize companies writing less than US$1.2 million in • Providing additional risk management benefits through the design annual premium. This type of Captive represents the most common of cost allocation systems, the accumulation of loss data, the design new Captive formation in Canada and the USA over the past five of more effective claims handling and loss control programmes, years. Similar to traditional Captives, the small Captive landscape and the development of uniform expectations and standards for is led by parent companies from many different industries, including risk management across divisions or subsidiaries manufacturing, real estate, transportation, agriculture, media and • Generating revenue - as an insurance entity, a Captive can be used technology, and professional services companies. to offer insurance products to a customer base. Two key benefits The days of Captives only being an effective risk management of this strategy include creating a possible underwriting profit from and finance tool for large public companies are no longer. For the sale of insurance, as well as offering a value-added product to companies of any size with a commitment to risk management, customers. An example of this is offering an extended warranty a Captive can be a key complement to the risk transfer/insurance on a product for a premium. programme. Of all Captives within Marsh’s 2014 Captive Benchmarking analysis, 52% are owned by private companies. Options available for Barbados-based Captives However, of the small Captives, approximately 80% are owned by While the majority of Captives are structured as single parent private companies (see diagram below), which supports the idea Captives (only writing the risk of the company and its subsidiaries that these small Captives are owned by small and midsize companies. and affiliates), options are available through group Captives and Protected Cell or Segregated Cell Captives (SCCs). All Captives, regardless of their size, need an appropriate level of capital and surplus. The minimum capital in Barbados is US$125,000 for a Single Parent Captive. By comparison, to rent a Cell from a SCC requires a minimum capital commitment of only US$12,500. However, additional risk-based capital is required depending on a Captive’s business plan. The average capital base for Marsh-managed small Captives is US$5.4 million, which demonstrates that these Captives have a strong surplus position to pay claims and are taking the notion of being an insurance company seriously. Barbados as a Captive domicile Corporations now recognise that Captives can be employed to insure far more than traditional property and casualty exposures. There are few limitations in terms of the risks that a Captive can Source: Marsh's Benchmarking Survey Analysis 2014 finance, provided the risks are evaluated, priced and capitalised properly. Captives are now insuring environmental liability, Captives offer many advantages product recall, weather risk, intellectual property infringement Captives offer both large and small companies a number of risks, volumetric risks, cost overruns and other business risks. financial, insurance and risk management advantages, including: Beyond insurance, Captives also can serve as viable alternatives • Helping organisations reduce insurance costs, improve cash flow, to other financial instruments, including letters of credit or other match revenue and expense (especially for longer tail liabilities), guarantees. and generate tax efficiencies Barbados has much to offer for companies seeking to set up a • Allowing organisations to secure coverage for risks typically not Captive. An excellent education system produces a skilled insurable, reduce the need for commercial insurance, improve a professional workforce, complemented by the robust regulatory company’s negotiating position with insurers, and create flexibility landscape in place, strong infrastructure, and a long-standing in insurance programme design and coverage history of working with Canadian-owned Captives, IBCs and other • Providing organisations with the ability to access international structures. It is expected that the number of Captives operating in reinsurance markets. These markets may provide greater access Barbados will continue to grow as more corporations seek to take to capacity, better pricing, and broader terms and conditions than more direct control of their risk financing strategies. F 28  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

29) International Insurance FATCA Impact for Barbados - Key Points by gle n Na smith B arbados boasts a healthy domestic and international Barbados offers a wide variety of competent professionals financial services sector. If you are looking to establish a including tax advisers, lawyers and regulatory consultants to help regular or international business company, an international navigate FATCA obligations and ensure that you set up a structure bank or insurance company, Barbados has an expanding network most suitable to your strategic and financial goals. of double taxation agreements and bilateral investment treaties which facilitate business. A strong legislative framework supported by two key regulators, the Central Bank of Barbados and the Financial Services Commission, provides supervision and ensures stability of the financial system. In 2010, the US Congress enacted the Foreign Account Tax Compliance Act (FATCA) to target non-compliance by US taxpayers holding foreign accounts. FATCA came into force on 1 July 2014 and requires all non-US financial institutions in every country of the world to report data about financial accounts held by US persons, on an annual basis, to the US Internal Revenue Service (IRS). Take note – this is game changing! This mammoth information dragnet is the first foray of its kind in requiring the exchange of Why comply with FATCA? It has big teeth! In order to avoid the threat of 30% withholding tax on certain US-source payments, a GIIN must be provided to withholding agents information between countries to ensure tax obligations are being met. This is the first venture, because the Organisation for Economic Co-operation and Development is working on an initiative with If you are setting up a business in Barbados that will have FATCA G-20 nations and numerous other countries for a broader scale obligations, then you have the advantage of designing your account automatic exchange of information to be a new global standard opening procedures and data capture requirements in such a between nations, and not only flowing unilaterally to the US IRS. manner as to satisfy both FATCA and Know-Your-Customer Barbados takes international standards very seriously and is obligations for anti-money laundering purposes, in one fell swoop. F committed to a sound and reputable financial sector. Accordingly, Barbados signed an inter-governmental agreement (IGA) with the IRS in order to facilitate FATCA compliance of the affected entities in its jurisdiction. An IGA may be reciprocal or non-reciprocal, and Barbados selected a reciprocal agreement, which means that Barbadians who hold financial accounts in the USA may have certain prescribed information reported to the Barbados Revenue Authority. The following US indicia may be used to screen accounts to uncover if you are dealing with a US person; however, further evaluation may be needed and some exceptions apply: Foreign Financial Institutions (FFIs), including depository and • US place of birth custodial institutions, investment entities and certain insurance • US citizenship/US passport companies with cash value products, or their holding company, as • US green card holder well as various other non-financial foreign entities (NFFEs), must • US lawful permanent resident register with the IRS using an online registration portal. Registrants, • A US incorporated entity in turn, will receive a Global Intermediary Identification Number (GIIN), which is to be provided to withholding agents. • A non-US incorporated entity with shareholding of 10% or more by a US person Why comply with FATCA? It has big teeth! In order to avoid the • US home or mailing address threat of 30% withholding tax on certain US-source payments, a GIIN must be provided to withholding agents. • Only address on file is a US “in care of” or “hold mail” address How do you know if you are a FFI or an NFFE, and whether or • US telephone number not you should register with the IRS? A legal entity analysis must • Power of Attorney to person with US address be done to determine your classification and whether or not you • Standing instructions to transfer funds to or receive from US account. are part of an Expanded Affiliate Group, as there may be a need to register as a branch or member if you are part of a larger corporate group structure. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  29  

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32) Wealth Management Fixed Income Strategy: Keep Your Eyes on the “Curve” by J erome D wight M any Captive board meeting conversations in recent times have concerned the outlook for fixed income portfolios and, specifically, what higher interest rates imply for returns on various government and corporate bonds. While, typically, the focus has been on central bank interest rate changes, looking at the overall shape of the yield curve may provide more insight for helping Captive investors formulate their investment strategies. It’s different this time The US business cycle is now relatively advanced and bond yield curves have flattened this year. The short-to-medium end of the curve (two to five years) rose as the market started to believe that the Fed would increase rates during 2015. However, longer-dated yields (10-30 years) were driven lower as economic growth and inflation expectations were brought down. In prior cycles, flattening came from rising short-term rates, while 10 and 30 year yields remained relatively stable. Portfolio implications - interest rate exposure a primary risk For Captive investors with significant exposure to US fixed income, Where do we go from here? interest rate exposure is a primary risk. The impact of rising With yields at historical lows across the curve, it is tempting for interest rates will put pressure on the bond valuations with even Captive investors to remain in cash until bond markets normalise. small moves in rates. However, the dangers in this strategy are twofold. First, normalisation might take much longer than anticipated, with investors earning nothing while waiting for a reversal. Second, there is a risk that short-term rates will rise faster than long-term yields, driving the yield curve even flatter. It is likely that the yield curve will initially steepen, as gross domestic product growth resumes and long-term rates start to climb. Only once the long-term growth path is secured can the Fed be expected to tighten monetary policy, driving short-term rates up. In effect, the yield curve should steepen and move up. Generating positive returns from fixed income will likely be more challenging and alternative approaches to fixed income management will need to be utilised. Against this backdrop of uncertainty, it is sensible to deploy a dynamic and flexible fixed income strategy that exploits a variety of sources of return. 1. Interest Rate Hedging Strategies Techniques may be adopted to eliminate or mitigate portfolio interest rate risk through the use of interest rate futures. This can be done in conjunction with a credit and/or currency hedging overlay to maintain an attractive yield. 32  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

33) Wealth Management 2. Laddered Bond Strategies 6. Structured Products Investors may adopt a laddered bond strategy, where maturities Structured products can be used to implement a particular view for bonds are spread out over a pre-determined time frame and on the market. For example, a Curve Steepener Note could be securities are held to maturity. This provides the investor with used to implement a view of a steepening yield curve, with periodic liquidity, capital loss mitigation and the ability to benefit from coupons paid subject to the differential between two ends of the rising yields at the long end of the ladder. yield curve. Additionally, Floating Rate Notes, which are near-zero duration instruments, offer investors increasingly higher coupons 3. Global Fixed Income/Emerging Markets Bonds as rates rise, while reducing the overall portfolio duration. Diversification and yield enhancement benefits may be available through expanding the fixed income universe into global and Looking Ahead emerging market debt. Many Captive investors have placed a good deal of reliance on traditional fixed income strategies which utilise credit quality and 4. Corporate Debt duration as the main drivers. While this approach has served Post-financial crisis, Captive investors have increasingly been them well for many years, in a more challenging environment the attracted to US corporate bonds as a way of enhancing yield. If solution is more likely to be found in a more diversified strategy, an anticipated increase in rates is accompanied by continued utilising the skills of a professional investment manager who has economic growth, the corporate sector will benefit, allowing for access to a wide menu of alternative solutions, as outlined in this higher coupons and better valuations. article. By crafting an investment strategy that carefully combines traditional Captive investing with the above solutions, it should be 5. Unconstrained Strategies possible to successfully navigate the choppy waters that we see in Unconstrained bond strategies are attractive because they are not store for the bond market. F tied to any single fixed income sector. While trying to “time the market” is not desirable, this strategy offers greater flexibility for skilled managers to add value through active sector allocation across the fixed income spectrum. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  33  

34) Wealth Management marsh.com | marsh.ca Current Market Trends in International Wealth Planning by marcia cyrus W ealth planning is often described as a combination of investment management and tax and estate planning for high net worth individuals (HNWIs) with investible financial assets of US$1M or more. More recently, the terms ultra high net worth individuals (US$30M or more) and centimillionaires (US$100M or more) have been added to the lexicon of wealth management, acknowledging the growth of the super-wealthy globally. Citigroup estimates that over the last five years, centimillionaires have grown by 29% with net asset values of US$39,900 billion. Just as the growth of assets has accelerated, the face of the wealthy is also changing rapidly. Wealth Insight, a leading researcher in the field, is forecasting that Africa will experience the highest growth in the number of ultra high net worth FOR MORE THAN 25 YEARS, WE’VE BEEN PART OF THE BARBADOS BUSINESS COMMUNITY. Marsh is a global leader in broking and risk management. Our colleagues in Barbados and Canada work closely together to bring captive and risk management solutions to North American companies. NICHOLAS CRICHLOW Marsh Barbados 2nd Floor, Building #1 Chelston Park Collymore Rock St. Michael, Barbados nicholas.crichlow@marsh.com 1 246 436 9929 TREVOR MAPPLEBECK Marsh Canada 161 Bay Street, Suite 1400 Toronto, Ontario M5J 2S4 trevor.mapplebeck@marsh.com 1 416 868 2604 Partnering for impactSM Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman. 34  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 individuals (UHNWIs) over the next ten years, growing 53%, with Asia and Latin America taking up the next two places with 43% and 42% respectively. In the centimillionaires category, Asia is expected to lead the way in the next decade with 52% growth, followed closely by Africa with 51%. Similar patterns are also projected in the growth of billionaires in those geographical locations. While the geographical factors play themselves out, wealth managers are consolidating their operations, and, ironically, in some cases, narrowing their geographical focus. Morgan Stanley sold its European, Middle Eastern and African wealth management business to Credit Suisse, while Barclays reduced its reach from 200 countries to 130. Despite additional reporting and compliance requirements that have been imposed globally, the offshore 

35) Wealth Management market continues to experience double-digit growth, reinforcing the message that there continue to be legitimate, compelling reasons (personal security or otherwise) why the world’s HNWIs and UHNWIs prefer to have a portion of their wealth managed More recently, the terms ultra high net worth individuals (US$30M or more) and centimillionaires (US$100M or more) have been added to the lexicon of wealth management, acknowledging the growth of the super-wealthy globally outside their countries of origin. The other trend being observed is that as the transfer of wealth moves down or across generations, the next generation of wealth has more complex and different needs than their predecessors. The younger generation/ new wealthy are much more tech-savvy than previous generations, and this means that financial planners must evolve with their needs by providing interactive platforms and video conferencing to maintain vital access to their clientele. The 2014 Capgemini report found that 57% of wealthy persons consider their relationship to be digital, and two-thirds would consider leaving a firm for lack of digital integration. Strong digital capability, coupled with personal interaction, is the combination needed to target and keep HNWIs. The global nature of the client is not only confined to residency, but also to the transferability of assets held. Clients are demanding, therefore, that their wealth management planner has the ability to manage across jurisdictions and can provide tax-efficient advice to maximise their planning options. This type of client is also looking for dedicated relationship management that can introduce them to experts to address all their needs for wealth structuring and preservation, investment management, planning and core banking – an integrated private wealth offering. As the wealth management world experiences growth and the geographical landscape changes, planning, and the tools to effect the plan, have to evolve to remain relevant in the information age. Inundated with data, HNWIs need to swim confidently through these waves of information, and the wealth manager must be the captain steering his large cargo safely to shore. F 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  35  

36) Wealth Management Private Trust Companies by R O L A N D J O N E S T he Private Trust Companies Act, 2012-22 (the Act) has been In order to qualify as a PTC under the Act, certain conditions must enacted into law in Barbados and was proclaimed on 16 be met. These include: May 2014. The Act provides an innovative product to enhance the international structure offering for companies and ultra • The entity must be a Barbados company which was first high net worth individuals and families. incorporated under the Companies Act, Cap. 308 of the Laws of Barbados A Private Trust Company (PTC), essentially, is a company which is incorporated for the main purpose of acting as a trustee of a specific trust or a number of related trusts • The articles of incorporation must state that it is a PTC and the name of the company must end with the words “Private Trust Company”, or the abbreviation “PTC” • The company must not solicit trust business from members of the public • No business other than that of being the trustee, protector or administrator of the trust (or managing or administering trusts) must be carried on by the company • All of the company’s trust business must be ‘related trust business’ A Private Trust Company (PTC), essentially, is a company which is incorporated for the main purpose of acting as a trustee of a • The company must appoint at least one ‘Special Director’ who specific trust or a number of related trusts. To give some perspective, is a resident of Barbados and has at least five years’ experience this can be compared to a professional trust company which is in in a discipline related to the administration of trusts. the business of acting as trustee and providing trust administration discipline may include law, finance, accounting, investment services to the public at large for a fee. PTCs have been quite popular management, or trust and estate planning This in various jurisdictions for about 20 years, with the main benefits including: • The company is required to have a Registered Agent in Barbados at whose office the registered office of the company shall be located. • Allowing wealthy individuals and/or families to establish trusts and maintain a substantial degree of control over the trustees. The Registered Agent’s Obligations This control is achieved by the individuals or family members The Registered Agent of the PTC must be satisfied that the conditions being directors on the board of the PTC of the Act are met, and is required to do this both at the outset and on a continuing basis thereafter. The Registered Agent is also • A corporate structure tends to be more readily understandable by obliged to take all reasonable steps to ensure that up-to-date non-professionals, particularly those from non-trust jurisdictions, copies of documents, such as the trust deed and any document and can be easily integrated into a family office or commercial varying its terms (in relation to each PTC for which it acts as structure Registered Agent), are kept at its office in Barbados. The Registered Agent is required to file an annual declaration of • PTC structures can enhance confidentiality, which is of particular compliance which includes a statement to the effect that the PTC interest to clients from jurisdictions where concerns over financial satisfies the requirements of the Money Laundering and Financing privacy are driven by issues of personal safety of Terrorism (Prevention and Control) Act 2011-23 of the Laws of Barbados and that it operates only as a PTC. • PTC structures offer some protection to trustees in circumstances If the trust is managed by a trustee licensed under the where the underlying assets of a trust comprise speculative International Financial Services Act, Cap. 325, and its activities are investments, or investments which involve a degree of risk (e.g. restricted to engaging exclusively to trading (i.e. buying, selling, private shares of an operational company owned by the family) holding or managing) securities, it is exempted from tax under the which might, in some circumstances, be regarded as unacceptable laws of Barbados. F to a risk–averse professional trustee. 36  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

37) Wealth Management Add Value to Captives through Asset Allocation by G ordo n a n derso n & ryle weekes I nvestment research has shown that a significant portion of a portfolio’s performance can be attributed to the asset classes and styles employed, and the weighting of each asset class and style. This is often called the strategic asset allocation. Tactical asset allocation, whereby the investment manager adjusts the asset allocation based on their capital market forecast, is also important in protecting capital and generating returns in excess of benchmark. Keep in mind, however, that no asset allocation technique can prevent a portfolio from losing value in severe market downturns, such as that of 2007-8, but it can protect the portfolio in most market environments, because when certain asset classes are falling, others are usually rising. Captives are typically looking for an investment strategy that provides a high degree of safety and liquidity, as well as some growth. In addition, Captives are restricted from investing in certain types of securities by regulations. These two factors create challenges in designing a suitable investment portfolio for Captive accounts. than a 100% fixed income portfolio. In addition, a portfolio of Captives are typically looking for an investment strategy that provides a high degree of safety and liquidity, as well as some growth approximately 30% equities and 70% fixed income has the same risk as a 100% fixed income portfolio. In other words, adding up to 30% equities increases the expected return without increasing the risk of the overall portfolio. Adding some alternative investments typically further enhances the risk adjusted return. With the continuing extended period of record low interest rates, Captives have been looking to other asset classes to improve returns without taking on more risk. Options include adding arbitrage strategies to complement the fixed income allocation and longshort strategies to complement the equity allocation. The key is to select strategies that are liquid and find managers that have When the Captive is first incorporated and initial capital is excellent track records. Alternative investment managers, typically, injected, the investment mandate is often 100% money market must have significant latitude in the strategies they employ. type investments. As premiums start to flow into the Captive, Therefore, it may not be feasible to impose too many guidelines fixed income is typically added and as surplus builds in excess of and restrictions on such managers. reserve requirements, equities are often added. In our experience Finally, there is a long-standing debate on whether to use active of working with hundreds of captive insurance companies, a management or passive investment strategies, especially for the typical asset allocation for established Captives is 80% fixed income equity allocation. A good ‘rule of thumb’ is to use a combination and 20% equities. This is what is called the strategic asset with index strategies most effective for efficient markets, such as allocation and is documented in the Investment Policy Statement. US large capitalisation equities. ‘Smart beta’ equity strategies, such Fixed income investments are chosen in the same currency as the as fundamental indexing, have gained a lot of traction with Captive portfolio so as not to introduce currency risk. However, institutional investors as they keep the benefits of passive indexes some allocation to global equities is often prudent to increase the but have a history of outperforming them. The key with active risk adjusted return of the portfolio. investing is to construct a portfolio with “best in class” external Modern portfolio theory has a very important concept that managers. F applies well to Captives called the “efficient frontier”. Referring to the following graph, it is interesting to note that a portfolio with approximately 15% equities actually has lower risk as measured by standard deviation, a mathematical measure of volatility/risk, 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  37  

38) Wealth Management International Mutual Funds: a Barbados Perspective by R oger cave B arbados may not be top-of-mind yet when considering • There is a growing community of investment professionals. The choices for domiciling a mutual fund, but that could be Chartered Financial Analyst (CFA) Society Barbados supports changing very soon. CFA charter holders and candidates in their continuing education; Barbados certainly works now for the more practical matters of CFA exams are administered in Barbados every June managing and administering mutual funds. The infrastructure and services one would expect are close at hand. For example: • Accounting staff and administrators are available and well trained; compensation levels are reasonable by global standards • High speed internet connections are a given, and investment data services, like Bloomberg, are well supported on the ground • Barbados is recognised by other key jurisdictions for fund domiciles, such as the Cayman Islands, as an approved venue for the provision of fund administration and management services • Regulatory oversight is appropriate and manageable • The ‘Big Four’ global accounting firms are here to audit funds to the standards expected by investors anywhere in the world • The major Canadian banks have branches and/or operations in 38  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

39) Wealth Management Barbados, allowing companies to have easy access to relevant Popular mutual fund domiciles like the Cayman Islands, for all banking services for running their businesses their ease of access and enabling legislation, typically cause funds domiciled there to incur withholding taxes on dividends • Direct flights to New York, London and Toronto mean that major of up to 30%. Barbados-domiciled funds, however, can benefit financial centres are relatively convenient for maintaining from the significant network of DTAs that have been put in place personal contact with dealers, analysts and clients. for international business over the years and can benefit from ... we have found that Barbados our home - is a viable and attractive place from which to manage and administer mutual funds ... withholding tax rates that are up to 50% lower. From our perspective at Fortress Fund Managers, we have found that Barbados – our home – is a viable and attractive place from which to manage and administer mutual funds, which we have done for the last 17 years. Our current range of 12 mutual funds includes those domiciled in a number of jurisdictions, including the British Virgin Islands, Cayman Islands, and Barbados itself. Our funds serve individual and institutional investors in Barbados and the Caribbean primarily, but are open equally to investors worldwide. Nothing is perfect, of course. There is one way in which Barbados As any fund manager will tell you, the investment business is about is still a “diamond in the rough” where mutual funds are concerned. people, and it has been our experience that people enjoy living and Although the mutual fund legislation for funds domiciled in Barbados working in Barbados because of its quality of life. This is an important is not yet up to “global” standards, significant modernisation of the distinction, and for some specially qualified non-nationals, there legislation is due to be enacted in the coming months. This upgrade is also quantitative help, with personal tax exemptions providing could mean that fund managers can soon look to Barbados not financial advantages for professionals working in Barbados. just as an attractive and tax-efficient place from which to manage Furthermore, from a corporate tax perspective, double taxation and administer their funds, but as an advantageous jurisdiction in agreements (DTAs) make it possible for global investment managers which to domicile them as well. F to operate from Barbados as international business companies in an extremely tax efficient manner. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  39  

40) Wealth Management International Estate and Succession Planning for the Family Office by D arre n stark T here is a trend, internationally, towards the establishment office – wealth transfer planning. of Single-Family Office (SFO) and Multi-Family Office (MFO) high net worth (HNW) families may need more than investment As a result, going forward, structures. As the names would imply, a SFO is a bespoke management services to interest them in a family office relationship. structure for one family or extended family, whereas a MFO can This is especially true today, as most HNW families are relatively and often does have multiple, unrelated families or “clients”. sophisticated investors in their own right, often having both discretionary and advisory investment experience. In general terms, historically, there has been a bias towards the investment management of family assets driving the rationale for The “new trend” for family offices is the outsourcing of the creating a family office structure. The investment management of investment management to the most cost-effective, yet efficient family assets is clearly very important, as the assets in question and competent, investment professionals globally. Different firms are tangible and the performance of the services of asset managers have referred to this in various ways, but essentially “Open can be measured. That is undeniable, but many legal practitioners Architecture” seems to be an industry-accepted term for this believe this is to the detriment of the very reason to create a family concept. What planners establishing the SFO and MFO need to focus on is the bespoke generational transfer of wealth in an estate Often, there are fairly straightforward mechanisms available to hold foreign property and/or investments in foreign companies, which will reduce or eliminate the need for foreign wills, probate and ongoing estate administration time and costs and succession context. Most ultra high net worth (UHNW) families have numerous family or private company investments. These often result in concerns for planners advising the families, including but not limited to: • Multi-jurisdictional tax, probate and estate considerations • A lack of an independent Board of Directors, with a resultant potential for substandard governance • The absence of any valuations of private or family investments, or else outdated valuations • Poor consolidated reporting to reflect the true wealth of the private (and sometimes even public) investments. Often, there are fairly straightforward mechanisms available to hold foreign property and/or investments in foreign companies, which will reduce or eliminate the need for foreign wills, probate and ongoing estate administration time and costs. International estate planning allows a family to coordinate international issues: • Real property in multiple countries • Beneficiaries with different countries of residence and citizenship • Different tax regimes • Potentially competing probate jurisdictions and costs. In addition, investment management discussions, when coupled with estate and succession planning, can dovetail nicely into coordinating other aspects of UHNW family planning. This may require, in some scenarios, the inclusion of: • Currency diversification and family needs away from the main or traditional currency of use • Asset partitioning, to segregate assets from potential claims, and potential different family member personal situations, including combined families from previous marriages • Leverage, for investment, asset protection or other reasons • Insurance, including life, for provision of tax obligations, ensuring corporate or real properties do not need to be sold to cover estate obligations, providing liquidity to the estate, etc. 40  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 

41) Wealth Management • Development or creation of an “estate binder” that simply collects and collates into one central location (typically then held with a solicitor, or perhaps a safe deposit box), a listing of all firms and contact personnel dealt with for investment management, insurance and other matters, allowing the estate administrators to quickly assess and contact the relevant parties. This is not to say there should be less of a focus on investment management. Rather, as investment management by itself becomes more of a commodity, professionals advising family offices will also need to address the increasingly complex wealth transfer needs of the UHNW family. F Right Environment for International Captive Insurance Manager USA Risk Group (Barbados) Ltd. was formed in Barbados and licensed under the Exempt Insurance Act as a Management Company on 7 November 1986, under the name “Mims International (Barbados) Ltd.” and was issued with Licence No. 1. On 28 February 2008, the company changed its name to USA Risk Group (Barbados) Ltd., after a majority stake was purchased by USA Risk Group. In April 2012, the company formed USA Risk International Ltd., enabling us to provide additional services to our clients, and this was recognition of the confidence the group had in Barbados. The USA Risk Group had established operations in other offshore domiciles and saw Barbados as a strong domicile that would complement and enhance its offshore presence. The reasons for being in Barbados include its highly educated and stable workforce, a mature offshore industry, a regulatory environment that is conducive to doing business, and an extensive network of double taxation treaties. The ability to hire local staff is a great benefit to USA Risk clients, as the continuity of service is much stronger than other jurisdictions which are often reliant on work permit holding, and thus transient employees. The Company provides management services to Insurance Companies licensed under the Exempt Insurance Act and the Insurance Act of Barbados. From the inception, we have had strong insurance expertise leading the operations, with the President of the Barbados operation coming from an insurance background. With USA Risk Group operating in 17 domiciles, we also draw on a wealth of experience in the industry from within the group to provide innovative solutions for clients. 2015  BARBADOS INTERNATIONAL FINANCE & BUSINESS  41  

42) Wealth Management The Beauty of Barbados as an International Financial Centre for Private Wealth Strategies by P aul J e n ki n s M any professional advisors offer investment strategies geo-political tensions (Afghanistan, Israel, Palestine and Ukraine) that include characteristics aimed at reducing risk, may have altered the strategies and outlook which professionals increasing predictable income, and generating stronger have on the financial markets, together with additional concerns returns. Great effort and time is expended in crafting and refining regarding new threats of terrorism (ISIS) and a global healthcare tactical asset allocation, floating-rate note bond ladders and hedged epidemic (Ebola). positions - addressing increased US or Canadian currency or commodity exposure. Of equal importance are the structure(s) and/or domicile(s) of choice for an individual and/or corporation, both of which can support or undermine these strategies. Structure, proper advice and planning are essential to the success of the overall financial plan, as well as to the effectiveness of financial strategies employed within the portfolio. Captive insurance companies, family offices and private/public corporations must now employ risk management assessment(s) prior to committing resources to the establishment of portfolios in financial centres around the world. Barbados has an attractive offering by way of its network of double taxation agreements (DTAs), excellence in regulation and qualified, competent service providers. Careful analysis and consideration reveal how the structure of Barbados’ intelligent tax environment can offer value to shareholders, beneficiaries and families. In the past, and in the current form, the existence of this nexus of taxation treaties positioned Barbados with a distinct advantage over other popular offshore jurisdictions. Companies and private individuals still tend to prefer to operate in a low-tax jurisdiction (with a DTA) as opposed to a zero tax jurisdiction - whose reputation could be questioned due to its policies on privacy and zero tax rate. In a growing world of global compliance and fiscal monitoring, information sharing, structure and transparency can prevent unnecessary dissonance and/or restructuring associated with markets, the above-mentioned concerns can be addressed with improper planning. proper financial planning and strategies. Dynamic/tactical asset The Organisation for Economic Co-operation and Development allocation, floating rate debentures, ‘rolling stop loss’ implementation (OECD), along with the Finance Ministers of many of the G-20 and hedged commodity positions via derivatives can intelligently nations, have led a 20 year ‘harmonised’ effort to thwart tax reduce risk in an entity’s planning and revision of investment avoidance and bring into disrepute nations and individuals who policies. Still, without a sound structure and/or an appropriate do not follow “information sharing” and globally accepted compliance choice of International Financial Centre, efforts of planning, albeit procedures and practices. Barbados has been able to manoeuver with correct financial strategies, can be undermined. through a myriad of regulatory changes and demands by offering regulation and best practices that are above and beyond the private investors. By choosing an internationally sound financial requirements of the OECD and other similar international groups. jurisdiction with service partners that offer forward thinking and This attention to ever-changing global regulation and excellence in savvy financial strategies, portfolios can benefit with structure and international relations has resulted in Barbados becoming an strategy. This is yet another dimension of the beauty of Barbados. F excellent choice as a location for portfolio and wealth management. The dynamic nature of the markets is one that is continuously evolving. Over the last 12 months, investors should have seen portfolio managers address risk with a great array of proactive strategies. The threat of rising interest rates, slowing Asian growth expectations, 42  BARBADOS INTERNATIONAL FINANCE & BUSINESS  2015 Although risk can never be fully diversified out of the financial Barbados can offer the ‘win-win’ scenario for corporations and 

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