TAX A DVISORY S ERVICES J ANUARY 2006

Transcription

1 TAX A DVISORY S ERVICES J ANUARY 2006 Focus on Barbados Budget 2005/2006

2 B UDGET 2005/2006 ECONOMIC A NALYSIS

3 Barbados Economic Proposals 2005/2006 The Barbados Economic Proposals 2005/2006 is based on the Economic Policy Statement delivered by the Prime Minister and Minister of Finance, the Right Hon. Owen S. Arthur, M.P., in the House of Assembly on Monday 16th January, This review was prepared by Ernst & Young and is intended for the information of our clients and associates. Ernst & Young Caribbean Worthing, Christ Church, Barbados, W. I. Tel: (246) Fax: (246) Website: January 17, 2006

4 Ernst & Young Caribbean Our Global Vision Ernst & Young contributes to the success of people and clients by creating value and confidence. With extensive business knowledge and hands-on industry experience we help companies capture growth, improve financial performance and manage risk - anywhere in the world. Our Caribbean Mission To be the leading professional services firm in the Caribbean providing through our people power, high quality, customised, innovative and integrated approaches, which create significant value for our clients. We are a fully integrated Caribbean firm organised along specialised service and industry lines. We have a single governance structure and all our strategies are guided by a shared vision. We provide integrated service delivery - coordinated, seamless services from various disciplines, enabled by our account management approach, which means that clients have a single account service representative proactively coordinating the delivery of relevant services by our entire team. We are innovators and agents of change investing considerable energy and resources in knowledge creation and management and the exchange of information as well as its communication to our clients and to the wider business community. B UDGET 2005/2006 ECONOMIC A NALYSIS

5 Table of Contents Page Oil Prices And The Barbadian Economy 1 Legacy Benefits of Hosting ICC Cricket World Cup Amalgamations Under The Value Added Tax Regime 8 Business Facilitation: Time to Put Words into Action 10

6 Oil Prices and the Barbadian Economy Introduction The recent increases in the price of oil has come as a shock to Barbadian businesses and is reminiscent of the oil price shock experienced in the late 1970s early 1980s. Then the average price of oil rose from $26 per barrel to $60 per barrel in 1979 and reached as high as $80 per barrel in This resulted in unprecedented levels of inflation in Barbados. For example, in 1978, the average rate of retail price inflation was approximately 11 percent and in 1979 it reached 16 percent. Government's fiscal balance went from -3.2 percent in 1978 to -3.9 percent in 1979 and -5.8 percent in While part of this deterioration was due to other factors such as rising expenditure on wages and salaries and transfers and subsidies, the worsening in government's fiscal accounts occurred principally through lower government revenue due to minor tax changes. The goods balance on the external current account rose by 7 percentage points to 40.5 percent of GDP, as fuel imports more than quadrupled. Therefore, on the basis of past experience, it is clear that the recent increases in the price of oil will most likely impact on inflation and the external balance of Barbados. The most recent rises in international oil prices can be attributed to three major factors: strong demand, supply constraints and speculators. With the three major industrial economies - the US, Japan and Europe - coming out of an economic slowdown and as China and the other Asian countries employ a greater amount of oil to power their manufacturing and expanding car markets, the International Energy Agency (IEA) estimates that in 2004 world oil demand rose by the greatest amount in 24 years. Unfortunately, supply is struggling to keep pace with demand. New product investment in particular has been disappointing. Whereas between 1996 and 2004 an average of 11.4 billion additional barrels of oil was found per year, only 6.8 billion per year was retrieved between 2001 and Added to this, supplies from Iraq have continued to be low due to terrorists' attacks, major producers such as Nigeria and Venezuela have had to cope with political unrests and strikes, and production from the Gulf of Mexico has been cut due to the effects of hurricane Ivan and more recently, Katrina. This propensity for sudden price changes has also opened the door for hedge funds and other speculators. However, by betting on the possibility of higher prices these investors have themselves exerted upward price pressures on the market. 1 B UDGET 2005/2006 ECONOMIC A NALYSIS

7 How Do Oil Prices Affect the Economy? Effects on Inflation There is a strong link between oil prices and domestic inflation in most countries. Rising oil prices have a direct impact on domestic inflation through increases in the costs of electricity and the price of fuel at the pump. However, oil prices also indirectly influence inflation through higher prices of imported and domestically produced goods and services. The larger the share of energy products such as fuels, electricity and gas in consumption expenditure the larger the direct impact on the retail price index (RPI). At present, the weights attached to energy products in the calculation of the RPI in Barbados suggest that they account for 11.3% (6.3% from fuel and light and 5% from petrol and oils) of total consumption. Therefore, if the domestic price of energy products rises by 10%; overall inflation would increase by just 1.1% assuming all other factors remain constant. Changes in oil prices also have an indirect effect on the RPI, as the prices of those goods and services that use energy in their production process will also react to the increased cost of energy. For example, rising petroleum prices tend to push-up the cost of animal feeds which in turn raises the cost of meats and derived products. However, given that the price of fuel at the pump is regulated, the full impact of the change in energy prices is not usually passed on to consumers. Nevertheless, it is anticipated that the most recent oil price increases will add a further BDS$33m per annum to the costs of the transportation industry. Domestic inflation is also subject to second tier or indirect effects. These second tier effects occur as rising consumer and producer energy prices result in a rise in the general price level for non-energy goods and services. These second tier effects produce contemporaneous as well as lagged effects on the remaining components of the RPI. However, in general most of these delayed effects tend to occur one year after the rise in oil prices due to the existence of Government price controls. Effects of Oil Prices on GDP and Other Macroeconomic Variables Simulations undertaken by the Central Bank of Barbados suggest that a US$20 per barrel rise in crude prices would reduce GDP in Barbados by about 2 percentage points or around $100 million (US $50 million) and increase domestic inflation by around 0.5 percentage points. From the production side, rising oil prices lower value-added, especially for oil-intensive 2

8 industries such as manufacturing and utilities, and to a lesser extent tourism, since it augments the costs of inputs used by firms. From the expenditure side, the rise in energy prices implies that consumers now have less to spend on other goods and services after paying more cash at the pump and on other energy related bills. Government's fiscal outturn is also likely to worsen somewhat, as the reduction in GDP leads to a slowdown in tax revenue growth, while spending on some public services could climb (for example, the Transport Board and the Barbados National Oil Terminal). Overall, the fiscal balance should worsen by between percent of GDP. At the same time, the rise in the amount of foreign exchange required to purchase the same amount of imported energy leads to a deterioration in the external current account and a loss of foreign exchange reserves. The external current account is likely to deteriorate by between 1.5 and 2.5 percent of GDP, principally due to greater spending on fuels and reduced travel receipts. Overall liquidity in the banking system could rise as new credit could be negatively impacted due to the greater perceived risk on the part of the commercial banking industry. Industry-Specific Issues Manufacturing Fuel and raw materials are the two largest expenditure categories for most manufacturing establishments. For example, in the production of soft drinks most of the costs arise from sugar, water, syrup and electricity. Labour is principally employed for administration, inspection and transportation. Some larger manufacturing firms have been using their own generators for a while now which run on so-called 'dirty oil'. This technique was first employed by the Arawak Cement Company Ltd. to cut costs and is also used by Roberts. Obviously, generators involve a relatively large capital outlay, but it is an area being investigated by a number of companies, as the gains from using the generators could offset upfront costs. Tourism For most businesses in the tourism sector electricity and gas costs represent 15 percent of total expenditure compared to 25 percent for labour. Given this proportion, a rise in energy prices would definitely have an impact on the profitability of most hotels and restaurants. 3 B UDGET 2005/2006 ECONOMIC A NALYSIS

9 Conclusions Although there still remains a risk that the current high level of oil prices could be maintained or increased further, most analysts think that this is unlikely. The IMF, in their most recent World Economic Outlook are projecting that average crude prices in 2006 would be about US$61 per barrel compared to US$54 per barrel in The impact on Barbados, if prices instead rise by a further US$20 per barrel in 2006, would be negative, but not as severe as that experienced in the late 1970s and early 1980s. Energy consumption as a ratio to GDP has fallen since this period, as energy savings have occurred due to the transition from a manufacturing-based economy to one in which services are predominant and advances in technology has led to energy savings in the home. The initiatives announced by the Minister of Finance in his recent Economic Statement are well thought out and will be an important component in Barbados's strategy for minimising the effects of high oil prices on the Barbadian economy. 4

10 Legacy Benefits of Hosting ICC Cricket World Cup 2007 ICC Cricket World Cup (CWC) is the third largest international sporting event. In 2007, the event will take place across nine Caribbean territories and is estimated to be viewed by 2.2 billion people around the world. It is no small feat for Barbados as the smallest country to ever host the Finals of the biggest cricket event in the world and it will take significant investment to meet the required international standards to cater to the thousands of visitors to our shores and to satisfy and exceed the expectations of the qualifying teams, match officials, sponsors and the event owners, the International Cricket Council (ICC). Our initial economic assessment made it quite clear from the outset that the investment will never be justified by the spend during those 50 to 60 days of cricket during March and April But when the legacy benefit is taken into account, there is absolute consensus that Barbados and the region could easily see the returns on expenditure. The concept of legacy benefit is not an academic exercise and has become the determining factor for such fierce bidding among countries vying for the opportunity to host a world games. For cities like Barcelona and Sydney, research shows significant effect on tourism following their hosting of the Summer Olympics in 1992 and 2000 respectively: (a) Barcelona's tourism arrivals have risen by a cumulative 129% since the Olympics and (b) Sydney saw increases in its tourism receipts of 7% in the years following the Games The legacy benefits however do go far beyond tourism and actually touch a wide range of economic sectors. Again the Sydney Olympics is an excellent example of extracting great long-term benefits from hosting a major sporting event. The Games reportedly gave Australia a multi-billion dollar boost to infrastructure development, tourism and convention business, international media exposure, and new business estimated to be worth more than Aus$6.5bn in economic activity over a 12-year period. Tangibly the Games delivered substantial business and economic returns to Sydney, New South Wales and Australia, including: 5 B UDGET 2005/2006 ECONOMIC A NALYSIS

11 $3 billion in business outcomes including $600m in new business investment Injection of $6b in infrastructure developments in New South Wales Injection of $1.2b worth of convention business for New South Wales between 1993 and 2007 Greatly enhanced business profile Greater expertise and confidence in tendering, both domestically and overseas on large scale projects Barcelona, another best practice model, reportedly achieved 50 years of infrastructure improvements in just 8 years in areas such as the airport, road, sewage, and telecommunications systems. In formulating Barbados' bid in early 2004, we determined that provided the legacy benefit is adequately derived, the return to Barbados lies in the region of 4 to 5 times the investment made. In keeping with Barbados' strategic approach to hosting the Cricket World Cup 2007, a Legacy Committee has been put in place, boasting some of Barbados' most distinguished minds drawn from a wide cross section of the society and representative of the many stakeholders involved. The Committee's principal role is to develop a Legacy Plan which includes identifying compelling long-term strategic Legacy Targets for CWC 2007; developing an action plan for each target and engaging the key drivers or stakeholders in the process to ensure that the targets, made up of identified measurable outcomes, are realized in the agreed time frame. Through a collaborative dynamic brainstorming process the following long-term strategic Targets have been selected: Excellence in Sports / Health - investing in building on Barbados' international reputation for cricket and sporting excellence and in developing existing and new sporting opportunities that can impact positively on health and can generate foreign exchange e.g. international motor racing. 6

12 Event Barbados - establishing Barbados as the Events Capital of the Caribbean for a wide range of International Events whether in medicine, sports, entertainment, arts and culture, business and education etc. Barbados was recently announced as the venue for the 2006 PGA Golf World Cup. Community Tourism - bringing tourists directly into the local communities to experience the "real" Barbados and to support the development of community entrepreneurship. Export Barbados - radically changing from an import mindset to an outward looking, export-oriented culture and investing and supporting all export activities and identifying and fast-tracking the development of new ones. Think Barbados - creating a Think Tank to leverage on the knowledge and expertise of Barbadians worldwide to create a source of new, leading-edge ideas for economic and social development. Green Barbados - to engage all Barbadians in permanently transforming our Island into the clearest and most environmentally advanced country in the world. Quality of Life - development of a Quality of Life index, measuring the elements (e.g. crime rate, condition of roads, health care, education, etc.) that are most important to Barbadians and that make the Island attractive for all residents and investors. Through a process of community outreach and discussion the targets will be finalized and published early in 2006 and shared with all Barbadians so that there is national buy-in and momentum to support the work pre and post-cwc These targets will closely underpin the country's National Strategic Plan , entitled "Global Excellence, Barbadian Traditions" with a vision to be "a fully developed society that is prosperous, socially just and globally competitive". Long after the flurry of activity which 2007 promises, it is undoubtedly the legacy planning we have done that will become the crowning glory of this experience for generations. The most valuable and important but financially immeasurable legacy will be the social cohesion created by involving as many Barbadians as possible in developing and helping to execute the Legacy Plan as part of a strong collaborative National Team effort. 7 B UDGET 2005/2006 ECONOMIC A NALYSIS

13 Amalgamations Under the Value Added Tax (VAT) Regime In today's competitive world, companies are coming to the realization that amalgamation or mergers is fast becoming an option and for some, the only option, if they are to survive in today's business environment. The Companies Act of Barbados provides for two or more businesses to amalgamate and continue as one company (Section 206 of the Act). The continual existence of some businesses in Barbados depends to a great extent on mergers and these have been accomplished to the satisfaction of the entities involved, thereby preserving jobs and the continued existence of those businesses. However, adverse developments have taken place with respect to some recent amalgamations, which could have a negative impact on future amalgamations of businesses in Barbados. These developments pertain to the VAT treatment now being applied by the VAT office to the companies that are involved in mergers. Previously, such mergers were treated by the VAT office as the continuance of a business in accordance with the provisions of Section 206 of the Companies Act, and are consistent with the treatment for income tax purposes. Now it appears that they are being treated as a supply of goods or services by the merging entities under either section 24 (sale of assets), 25 (cessation of registration) or 26 (sale of a taxable activity) of the VAT Act. We are aware that, although every effort was made by the Barbadian authorities to introduce a relatively simple VAT regime, there will be occasions when grey areas will arise and, because of this, administrators of this tax system would be faced with difficult decisions. Such decisions are generally based on prudence and conservatism and therefore not generally in the favour of the tax payer. However, we view this particular diversion from the established tax treatment applied to amalgamations as an unnecessary burden to the restructuring efforts of the business sector. Implications of new method of addressing amalgamations Previously, on the amalgamation of two or more companies, the new company (Newco) would be registered for VAT and, although having a new VAT registration number, would submit its VAT returns on the basis of the information in the records of the companies that were amalgamated. Subsequent returns would then be submitted based on Newco's bimonthly financial data. Once Newco has been registered for VAT purposes, the VAT registrations of the predecessor companies were cancelled without any further VAT implications. The new VAT treatment regards the amalgamation as a supply for VAT purposes with Newco being the recipient of the supply and the disappearing companies being the suppliers. Apparently, the decision to assess the amalgamating companies for output tax is based on the assumption that a supply of goods takes place on an amalgamation. This VAT treatment for 8

14 amalgamations will often result in a significant output tax liability for the companies involved in the amalgamation and an equally large input tax credit for Newco. This is particularly the case where a large stock of inventory is kept by the companies concerned and will create severe cash flow difficulties for these companies. We do believe that the VAT treatment with respect to amalgamations previously adopted by the VAT office was correct because there is no sale, transfer or other disposition of the assets of the companies involved in the merger. It should be noted also that these companies do not issue invoices in these transactions and that there is no exchange of goods. It is our view that this new position taken by the VAT authorities is not conducive to the advancement of business in Barbados. Furthermore it will not enhance Government's revenue intake since, in the case of the merger of registrants, it will simply be a case of companies having to borrow (and incur additional interest expense) to pay the output tax and another company recovering the tax as input tax. It should be noted that the general tendency is for companies involved in similar types of business to merge thereby minimizing government's VAT exposure. For example, registrants such as wholesalers and retailers merge with companies making similar taxable supplies. Similarly, non-registrants such as financial institutions and medical entities merge with entities in their respective groupings thus maintaining the status quo of providers of exempt supplies. In the unlikely event that a company making taxable supplies were to merge with one making exempt supplies government would still not be disadvantaged because of the apportionment provisions of section 48 (1) (b) (iii) of the VAT Act. This matter has now become one of grave concern for the business sector and requires an immediate resolution. 9 B UDGET 2005/2006 ECONOMIC A NALYSIS

15 Business Facilitation: Time to Put Words into Action In his presentation of the 2004 Economic and Financial Policy Statement, The Right Honourable Owen Arthur conceded that the bureaucratic processes within the public sector have impacted negatively on Barbados' business environment. Indeed, if it is the Government's vision for Barbados to be the premier high quality producer and exporter of financial and other services, then the current inefficiencies that exist within the public sector that hamper business in Barbados need to be addressed urgently. Historically, there have been numerous complaints from local business persons and foreign investors relating to the bureaucracy involved in dealing with certain Government departments. The complaints have ranged from issues surrounding the delays in obtaining clearances of imported goods from the Customs Department, to the lengthy procedures for granting work permits. Complaints have also been heard regarding the lengthy approval processes within the Town and Country Planning Department and Exchange Control Authority. Poor information flows within and between government bodies have also proved to be a major concern. Government has made some strides in dealing with these issues as evidenced by various projects undertaken by the Office of Public Sector Reform. For example, The Customs Automated Systems for Customs Data ("ASYCUDA") project has facilitated the computerization of the processes within the Customs Department to improve the efficiencies of that department. The SmartStream project has also allowed for the computerization of Government's financial procurement and payments processes. One area of concern, however, is the pace of change. For example, through the Enabling Environment for Private Sector Investment ("EEPSI") project, Government has sought to link the various Government departments via the internet to streamline and expedite flows of information to the benefit of the various Ministries and the general public alike. The proposed project start-up-date was the year However, the Economic Policy Statement for 2005 proposed that the first public sector services to come online would be the Land Tax Department, the Land Registry Department and the Registration Department. It is therefore expected that by September 2006, the general public would be able to perform on-line transactions with these Government departments. The Customs and Inland Revenue Departments would also be on-line by September While we eagerly anticipate the availability of such facilities, the length of time that it has taken to reach this stage is lamentable. We have talked for too long about the benefits without benefiting. It must be kept in mind that although Barbados has high quality service providers, investors will seek to locate where their business requirements can be met in a timely manner. Within the Caricom Single Market and Economy ("CSME") and the international market place, the competitiveness of local businesses will be severely hampered if business concerns are not dealt with expeditiously. 10

16 The successful implementation of the above initiatives would assist in the creation of a culture of service excellence in the operations of the various Government agencies and enhance Barbados' reputation and ability to compete against leading international business centers such as the British Virgin Islands, the Cayman Islands and Bermuda. However, the success of the above initiatives will require far more than installing computers, providing Internet access and modern buildings to house public servants. Technical training in the specified areas within Government is essential if public servants are to have the confidence required to effectively carry out their duties using these tools. Training should not, therefore, be limited to the use of the new technology. Training also needs to be provided on a wider scale with respect to specific technical issues, such as the technical tax and other issues related to the international business sector. While it is recognized that such training is expensive when facilitated by well respected international organizations, the private sector may be of assistance in this regard. This training could be effected through the facilitation of seminars by the Barbados private sector in these specific areas. All agree that the cooperation between the private and public sector is a crucial element in the success of the public sector reform initiatives. It is now time to put theory into practice by endeavoring to cooperate in these vital areas, such as technical training, to the benefit of all concerned. Teeth also have to be given to those charged with the responsibility for facilitating the public sector reform. Government Departments should be made accountable for failure to implement the initiatives that have been determined to be beneficial for the business landscape in Barbados. No longer should the resistance to change be viewed as an acceptable stumbling block to our overall success. Efforts have been made to sensitize the Barbadian public to the importance of international business to the economy as well as the importance of delivering high quality services to customers. Meeting this challenge has been an upstream battle, not only for Government, but also for the private sector. We, too, need to take steps in facing this challenge. The private sector needs to institute standards of service excellence that are second to none. The sector also needs to lead by example, in a spirit of cooperation, if similar demands are to be made of Government. One means of so doing is through contributing to and participating in the National Initiative of Service Excellence ("NISE"). How are our businesses doing in this respect? It takes time to change the culture of the work force of an entire country. All stakeholders must, therefore, be continually reminded of the disadvantages associated with any failure to seize opportunities in this increasingly competitive environment in a timely fashion. With the CSME being implemented in February 2006 and the World Cup 2007 rapidly approaching, procrastination is a luxury that we can ill afford. The time to act is now. 11 B UDGET 2005/2006 ECONOMIC A NALYSIS

17 Ernst & Young Tax Leaders Ben L. Arrindell, Dip. Law Country Managing Partner and International Tax Partner Ben is the Country Managing Partner with responsibility for the Barbados and BVI offices Ernst & Young Caribbean. He is also an International Tax Partner and leader of the firm's International Business industry group. With over 20 years experience in the tax advisory field, he specialises in advising clients on Barbados tax issues as well as international tax matters. Ben joined the firm in October 1992 from the International Tax Group of Ernst & Young, London (UK). Prior to joining Ernst & Young, he worked with the International Tax Division of the UK Inland Revenue where his duties included negotiation of double taxation treaties and dealing with issues relating to tax harmonisation in the European Union. A frequent speaker on international taxation matters both in Barbados and overseas, Ben has also written articles on international tax issues for a number of international tax publications. Some of Ben's professional responsibilities and experiences include: Member of the CARICOM Working Group on Fiscal Policy Member of the Barbados Tax Review Committee Member of the Joint Policy Working Group and Chairman of the group's Strategic Planning sub-committee Member of the Board of Directors of the Barbados Private Sector Agency Member of the United Nations Committee of Experts on International Cooperation in Tax Matters Maria Robinson, BBA, CA Partner, Tax Services Maria is a partner in our Tax Advisory Service Division. She has spent 18 years working in the professional services field, with over thirteen years of Tax experience. She holds significant experience providing advice on tax planning for regional and international corporate clients particularly in the financial and hospitality industries for clients based in Barbados and the OECS. Over the course of her career Maria has developed a keen appreciation for the tax Implications pertaining to mergers and acquisitions and reorganizations, at the local, regional and international levels. She is a Member of the Institute of Chartered Accountants of Barbados Institute of Chartered Accountants of Barbados (ICAB), a Member of the Tax Committee of the ICAB and a Member of the Institute of Chartered Accountants of Nova Scotia, Canada. 12

18 Wade M. George, BA, LLM Partner, Tax Services Wade is the regional service line leader for Tax & Corporate Services. He has overall responsibility for coordinating these services to clients throughout the Caribbean. He specialises in the area of corporate international tax advisory services and his experience includes a three and a half year assignment with Ernst & Young's International Tax Services Group in New York. Wade has considerable experience in developing and implementing tax minimisation planning structures in Jamaica, Trinidad & Tobago and Barbados, including mergers/acquisitions, green-field projects, and capital markets transactions. He has been involved in tax engagements for a variety of multinational clients of the firm. Wade is an Attorney-at-Law with a BA in Law and Sociology and a Masters of Law degree. He has spoken extensively on international tax matters in London, New York and Toronto. Nicole E. Lawrence, FCCA, CA Partner, Tax Services Nicole is the partner in charge of operations within Ernst & Young's Tax department in Trinidad & Tobago. She has been involved in the assessment of the financial and tax implications of financing arrangements for companies in the oil and non-oil sector, due diligence reviews in the financial sector, and the preparation of business plans and feasibility studies using financial modelling techniques. Based in Trinidad, she is responsible for the management of the local compliance and advisory practice and the development of the international tax advisory services. Nicole has substantial experience in the development of financial products and the establishment of tax efficient corporate structures for local and international companies. Allison Peart Partner, Tax Services Allison has over ten years of public accounting experience with Ernst & Young (Canada) and KPMG (Canada), serving a wide range of clients. Now based in Jamaica, she currently provides tax advice to clients there, including several subsidiaries of UK and US companies. Allison is a Canadian Chartered Accountant with several years of experience preparing and reviewing tax provisions for various clients. She has provided tax advice and implemented complex tax strategies for several European, US, Canadian and Caribbean firms and has experience in dealing with derivative products and structures for international financing and capital markets. 13 B UDGET 2005/2006 ECONOMIC A NALYSIS

19 Winston Gibbs, ATII Principal, Tax Services Winston joined Ernst & Young Barbados in 1978 after working with the Inland Revenue Service in the United Kingdom. He is an Associate of the Chartered Institute of Taxation in the UK. Winston has extensive experience on advising local and international clients on structures and tax planning. Simon Paler, BA (Hons), FCA, ATII, AMCT Principal, Tax Services Simon joined Ernst & Young in He has ten years tax experience having worked in the commerce section in the tax group of a large fashion retailer, an investment house and a multinational consulting group. Simon has wide experience of both cross-border and domestic transactions in Europe, Africa the Caribbean and Latin America utilising a range of tax mitigation techniques. Dominique Pepin, LLB, Dip Senior Manager Dominique joined Ernst &Young Caribbean in 2001 and holds a Masters degree in Taxation from the Universite de Sherbrooke in Canada. Before relocating to Barbados, she worked in a professional services firm as a Senior Tax Advisor in Canada. She has been trained in corporate reorganizations and has in-depth knowledge of the Canadian taxation system. Since joining Ernst & Young, Dominique has been involved in advising clients on the international tax aspects of structuring their investments in the Caribbean. Mark Shorey Senior Tax Manager Mark is a seasoned tax professional with over 40 years of tax experience. He worked with the Barbados Customs and Excise Department for over 25 years, followed by 15 years in a major professional services firm, where he was responsible for the delivery of VAT compliance, indirect tax and world trade services in Barbados and the Eastern Caribbean. Mark also specializes in customs classification and valuation and other customs advisory services. Gail Ifill, LLB Manager An Attorney-at-Law, Gail was recently appointed a Tax Manager based in the Barbados office of Ernst & Young Caribbean. She has extensive experience in International Business and in advising on tax matters in Barbados and the OECS. 14

20 Ernst & Young Caribbean Leaders Executive Chairman Colin Soo Ping Chow Tel: (868) Country Managing Partners Barbados Ben L. Arrindell Tel: (246) Trinidad & Tobago Angella Persad Tel: (868) Jamaica Allison Peart (Leader of Operations) Tel: (876) Service Lines Assurance & Advisory Business Services Nicholas Gomez Service Line Leader Tel: (868) Business Risk Services Arnold Niranjan Tel: (868) Client Accounting Services Barry Davis Tel: (868) Tax Advisory & Corporate Services Wade George Service Line Leader Tel: (868) Nicole Lawrence Tel: (868) Corporate Advisory Services William Hutchinson Service Line Leader Tel: (246) Corporate Finance Angella Persad Tel: (868) Zack Nadur Tel: (246) Industry Leaders Financial Services Colin Soo Ping Chow Tel: (868) International Business Ben L. Arrindell Tel: (246) Hospitality & Real Estate Services Andrew McConney Tel: (246) Retail, Distribution & Manufacturing Nicholas Gomez Tel: (868) Lisa Padmore Tel: (246) Energy Lily B. Young Tel: (868) B UDGET 2005/2006 ECONOMIC A NALYSIS

21 Contact Information Ernst & Young Barbados Worthing Christ Church, Barbados BB15008 Tel: (246) Fax: (246) Jamaica 8 Olivier Road Kingston 8, Jamaica Tel: (876) Fax: (876) Trinidad and Tobago 5/7 Sweet Briar Road St. Clair, Trinidad Tel: (868) Fax: (868) Lewis Street San Fernando, Trinidad Tel: (868) /6 Fax: (868)

22 ERNST & YOUNG BARBADOS TAX SUBSCRIPTION SERVICES Update your reference library with the latest edition of Barbados' Tax Legislation. Current to September 2005, this edition provides important updates including: l l l Barbados Income Tax Act - The Income Tax Act Cap. 73, the Income Tax Regulations and the Orders. Barbados Income Tax Treaties - which consists of various Income Tax Treaties which Barbados has concluded with regional and international countries to date, including: Botswana, Canada, CARICOM, China, Cuba and many others. Value Added Tax Act - The Value Added Tax Act Cap. 87 and Regulations. For each subscription year, the service entitles you to a copy of any amendments and any additional information or improvements we introduce, during the year. Each subscription fee is based on a calendar year. The annual fee for an individual subscription service to a local subscriber is BDS$ (VAT inclusive) and for an overseas subscriber is US$ A discount of 10% will be offered for the subscription to any 2 of these services and a 20% discount for the subscription of all 3 services. Ernst & Young Caribbean P.O. Box 261 Worthing Christ Church Attention: Kay Thomas Tel: (246) Fax: (246) Kay.Thomas@bb.ey.com

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