US/Barbados Tax Treaty Tightened To Prevent Evasion

by Leroy Baker, Tax-News.com, Washington

16 July 2004

The governments of the United States and Barbados on Wednesday signed an agreement designed to counter tax evasion under the 1984 Income Tax Treaty between the two nations.

The second protocol to the 1984 treaty was co-signed by US Treasury Secretary John Snow and Barbadian Industry and International Business Minister, Dale Marshall.

“The Protocol we are signing today is a demonstration of both the strength of our relationship and the commitments of our respective governments to keeping the tax treaty's provisions up to date in light of economic developments,” commented Snow on the new agreement.

The Treasury Secretary went on to explain:

“The focus of the agreement is the modernization of the anti-treaty shopping provisions, which are the central mechanism for ensuring that the benefits of our income tax treaty go exclusively to bona fide residents of Barbados and the United States."

“The agreement contains modifications necessary to address concerns about inappropriate exploitation of treaty benefits, including the potential for the unintended use of the treaty by US companies that purport to migrate their corporate structures."

“The agreement further ensures that the treaty operates to accomplish its intended purpose of addressing double taxation and cannot be used inappropriately to eliminate all taxation altogether.”

Snow called upon both countries to swiftly ratify the new protocol.

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