House passes 'profit-shifting' bill

FARIS AL-RAWI, Minister of Local Government and Rural Affairs, mockingly urged medical treatment of sorts for two Opposition MPs to cure their alleged "political amnesia" over the Government's legislative record, in the House of Representatives on March 6.

That happened just before MPs passed a bill to make large corporations (worth US$850 million) properly account to local tax authorities, not just register in havens of zero/low corporation tax, a practice known as tax base erosion and profit shifting (BEPS).

Last month, the Senate passed the Base Erosion and Profit-Shifting Inclusive Framework (Country-by-Country) Reporting Bill 2023, in line with European Union (EU) tax requirements.

Finance Minister Colm Imbert piloted the bill which he said required large companies to disclose their profits, staff size, assets and earnings, so as to help curb risk, tax evasion and tax avoidance, thereby promoting fair competition and transparency in the commercial landscape. Saying places like the Cayman Islands claimed to have much economic activity while no tax was payable there, he said the bill's measures would help show if multi-nationals were trying to avoid paying taxes.

Oropouche West MP Davendranath Tancoo said the legislation was substantial and critically important. He said BEPS undermined the fairness of tax systems, deprives countries of tax revenues, and encourages other forms to do likewise. He wondered when Imbert had become concerned to bring such a bill. He read a 2017 letter by Imbert promising to bring BEPS laws by 2019, but said, to date, those had not been implemented.

Tancoo expected the Government to blame that on the current wait for the creation of the Trinidad and Tobago Revenue Authority, but said it could be done now under the Board of Inland Revenue. He said, since 2011, the Government had access to a template document on which to craft a local bill, plus the examples of such bills now in effect in other Caribbean islands.

Tancoo accused the Government of doing nothing on that in nine years, hurting Trinidad and Tobago's international reputation and costing millions of dollars on lost tax revenues. He estimated the lost revenue in the energy sector in 2018 alone was US$2.6 billion. "This is negligence, maybe even criminal negligence!" he stormed.

"Somebody should be held liable for economic treason!"

Tancoo said that instead of the Government chasing down low-hanging fruit of some $140 million in revenues under this legislation, it had hitherto opted to pursue the property tax.

Al-Rawi alleged Tancoo and his colleague Mayaro MP Rushton Paray were both suffering from amnesia of the political variety.

He traced a host of bills the Government had piloted in Parliament over the years in areas such as tax information exchange with foreign jurisdictions to comply with the requirement of the Global Forum arrangement and the EU.

So incredulous was Al-Rawi at the contributions of Tancoo and Paray, he asked, "What have you been smoking?"