4 Welcome to the 2014 Edition 5 Message from the Minister 7 Facing the Challenges while Building a Strong Brand 8 Barbados: the Ideal Jurisdiction for Family Offices, Private Trust Companies and Foundations 10 Investment Technology Specialists Choose the Ideal Location 10 Current Trends in International Wealth Planning 12 Global Investment Strategies for International Investors 13 International Mergers and Acquisitions Advisors Expand into Barbados 14 Global Trends in Wealth Management– the New World of Risk Mitigation in Portfolio Management 16 Why Global Investors are Choosing Barbados 17 Trust Barbados for a Firm Foundation 18 Tax Treaties Prove their Resilience 20 Barbados - Keeping up with Regulatory Best Practice 22 Establishing and Maintaining Trust and Transparency Sponsors 24 The Financial Services Commission - a Facilitator of International Business 25 Marine Compressed Natural Gas Transporter Aims to Enhance Barbados Operations 26 Back to the Basics – Why a Captive and Why Barbados? 28 The Impact of Corporate Governance on Business Performance 29 Barbados: an Attractive Choice for Global Entrepreneurs 30 Barbados: a Comfortable Home for Canadian Captives 32 Captive Insurance and New Governance – What Do I Need to Know? 33 Choosing a Domicile: a Latin American Perspective – Oil and Gas Opportunities 34 … And So Much More 36 Is there still a place for Barbados as your International Business Location? 37 Structures and Strategies for Foreign Investors using Barbados as their Domicile of Choice 38 Growth Opportunities for Barbados – Emerging Markets and Products 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: Wealth Management CIBC FirstCaribbean International Bank Cidel Bank & Trust DGM Bank & Trust J&T Bank and Trust Inc. RBC Wealth Management, Caribbean Scotiabank International Insurance CGE International Services Ltd. Global Re SCC Marsh Canada Limited USA Risk Group International Business Brookfield International Bank Inc. Chancery Chambers Deloitte & Touche Ernst and Young First Provider Goldstream Management Services Ltd. JLT Towner KPMG Meridian Law Platinum Offshore Management Services Inc. PricewaterhouseCoopers Contents Establishing and Maintaining Trust and Transparency – see pages 22-23publication, we are pleased to present Barbados International Finance & Business 2014, and extend best wishes to all our readers for prosperity During 2013, Barbados saw an increase in company registrations. The forecast for the coming year is encouraging as the global outlook is generally positive, following strengthened activity in the latter half of last year and projections suggesting that this momentum should continue into 2014, with the focus very much Barbados continues to market itself as the domicile of choice for Canadian-parented companies and companies incorporated in its double taxation agreement (DTA) network of countries, with particular focus on Latin America and Europe. Last year, the DTA with Bahrain and Protocol to the DTA with Canada entered into force. During the same time period, a DTA with Singapore and the Protocol to the DTA with Malta were signed, while agreements with Malaysia and the United Arab Emirates were initialled. Barbados remains a low cost, well regulated International Financial Centre with world-class infrastructure and an intelligent workforce. Importantly too, Barbados is very much open for business. We invite you to consider us as your domicile of choice - providing innovative solutions for international business expansion. We also invite you to send your comments and suggestions to bifb@investbarbados.org. With very best wishes, James Gardiner Welcome to the 2014 Edition Barbados continues to market itself as the domicile of choice for Canadian-parented companies and companies incorporated in its double taxation agreement (DTA) network of countries ... 4 BARBADOS INTERNATIONAL FINANCE & BUSINESS 2014MESSAGE FROM MINISTER THE HON. DONVILLE INNISS MINISTER OF INDUSTRY, INTERNATIONAL BUSINESS, COMMERCE AND SMALL BUSINESS DEVELOPMENT The last year has been another notable one for the international business sector here in Barbados and across the world. It certainly has been an exciting first year as Minister of International Business as I proverbially return home to the sector in which I have worked for numerous years. I am therefore pleased to make my first contribution to the sector’s flagship magazine. This is the sixth edition of Barbados International Finance & Business. The magazine is produced annually by Invest Barbados in order to provide you, our existing and potential investors, as well as tax and legal advisors, an update on what has changed recently and the continued value of using Barbados in your operations. It is therefore a useful and informative tool for you. The international business sector is the largest contributor to corporate taxes in Barbados and is of major importance to our economy. The most recent measurement of its contribution showed that earnings reached BDS$874 million. On top of this, spillover effects from the sector include spend in the wider economy through hotel stays, food and restaurant visits, and importantly, indirect employment. Approximately 4,500 direct, full time jobs can be attributed to the sector. During 2013, four hundred and seventy-four international business entities were licensed. This represents a 9.4% increase over the previous year's performance. The impact is extensive. International business is a driving force in the Barbadian economy. The past year has been marked by continued threats to this important sector of Barbados’ economy. Even though some parts of the world economy have begun to rebound, the outlook remains cautious, as does the approach of decision makers in business. This has been a challenge to sectoral growth but Barbados continues to make strides forward. The move to automatic and multilateral exchange of information is the latest in international changes to regulatory requirements for international financial centres. Being a transparent jurisdiction that attracts businesses of substance however, Barbados is up to the task. This leads me to mention a few of the initiatives being undertaken by the government to maintain and further improve the quality of the Barbados value proposition. Strengthening our regulatory framework is always important. Right-sized, we continue to comply with international standards and best practice, including the expansion of our treaty network. Constantly introducing products in demand is another important part of maintaining our attractiveness. Several vehicles are on course for development and are creating a buzz among our local and international partners. For example, legislation to facilitate the establishment of limited liability partnerships, real estate investment trusts, investment funds and incorporated cell companies are all in various stages of development and will add to the numerous ways in which investors can use Barbados to do business. Expanded opportunities for high net worth individuals interested in residing here are also on the cards. Bringing these new products to the market is just one example of the Government’s commitment to international business. In addition, increased resources are being made available to the sector to make sure that Barbados can continue to attract and facilitate investors. Determined efforts are also being made to ensure that international best practices in regulation are enshrined in law, safeguarding the quality of our product. We are continuing our modernisation of government agencies that are integral to the sector to ensure the best possible service is being offered. Our goal is to make Barbados the leading International Financial Centre in the Western Hemisphere. Barbados offers an exceptional range of investment vehicles. It is still an excellent place to do business. I invite you to explore the information in this publication on the opportunities Barbados provides, and also to try them! The Hon. Donville Inniss Minister of Industry, International Business, Commerce and Small Business Development 2014 BARBADOS INTERNATIONAL FINANCE & BUSINESS 5 Contributors © Copyright Invest Barbados 2014. 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. Barbados International Finance & Business 2014 Edition Published by Invest Barbados | www.investbarbados.org Barbados: (246) 626-2000, Toronto: (416) 214-9919, New York: (212) 551-4375, London: 44 0207 299 7195. Email: bifb@investbarbados.org Technical Review: Ben Arrindell Editorial Committee: James Gardiner Caroline Gardiner Wayne Kirton Sandra Payne Emeline Taitt Authors: Emeline Taitt Invest Barbados etaitt@investbarbados.org Caroline Prow DGM Bank & Trust cprow@dgmgroup.com Christian Paul CIBC FirstCaribbean International Bank christian.paul@cibcfcib.com Gordon Anderson Cidel Bank & Trust ganderson@cidel.com Ryle Weekes Cidel Bank & Trust rweekes@cidel.com Jerome Dwight Royal Bank of Canada (Caribbean) Corporation jerome.dwight@rbc.com Paul Jenkins Scotiabank paul.jenkins@scotiabank.com Melanie Jones Lex Caribbean melanie.jones@bb.lexcaribbean.com Sade Jemmott Lex Caribbean sade.jemmott@bb.lexcaribbean.com Françoise Hendy Invest Barbados fhendy@investbarbados.org Sadie Dixon Central Bank of Barbados sadie.dixon@centralbank.org.bb Novaline Brewster Central Bank of Barbados novaline.brewster@centralbank.org.bb Sir Trevor Carmichael, Q.C. Chancery Chambers chancery@chancerychambers.com Randy Graham Financial Services Commission rgraham@fsc.gov.bb Ricardo Knight JLT Towner Barbados ricardo_knight@jlttowner.bb Kirk Cyrus JLT Towner Barbados kirk_cyrus@jlttowner.bb Ikins Clarke Deloitte & Touche idclarke@deloitte.com Trevor Mapplebeck Marsh Canada Limited trevor.mapplebeck@marsh.com Nicholas C. Crichlow Marsh Management Services (Barbados) Ltd. nicholas.crichlow@marsh.com Glenna Smith Smith Compliance Consulting Inc. smith_glenna@hotmail.com Terry-Ann Moe Ernst & Young terry-ann.moe@bb.ey.com Gloria Eduardo PricewaterhouseCoopers gloria.eduardo@bb.pwc.com Wayne Lovell KPMG wlovell@kpmg.bb Liza Harridyal-Sodha Harridyal Sodha & Associates liza@lizalaw.com Design, Layout & Printing: EVillages Ltd. Global Name Regional Presence Local Expertise We are more than just auditors and tax advisors – we also provide consultancy and financial advice to governments and private sector companies. We can help companies seeking to purchase or merge with other companies, those that require restructuring, and assisting companies that suspect fraud or would like to improve fraud prevention measures; this is just a selection from our menu of services. With a globally-connected network of member firms in over 150 countries, Deloitte in Barbados brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Our integrated approach combines keen insights with industry knowledge to help our clients excel. We are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in our communities - globally, regionally, locally. www.deloitte.com barbados@deloitte.com + 246 430 6400 6 BARBADOS INTERNATIONAL FINANCE & BUSINESS 2014S mall developing economies such as Barbados, when faced with a chal- lenging global environment and subdued growth prospects, constantly search for new industries that will max- imise the country’s economic potential. Over the last couple of decades, the international financial services sector has emerged as one such area and has become an important source of government revenues for home and host economies. This activity has proven to be successful in Barbados for reasons such as economic and political stability, good regulation, legal structures that made financial transactions easy to undertake, freedom from exchange controls and the ability of high quality service providers to meet investor requirements. In recent times, the negative effects of the global financial turmoil on international markets and on policymakers' attitudes towards International Financial Centres (IFCs) have become a big challenge for small states. To protect their revenue base, developed economies have accelerated efforts to strengthen their global financial systems and, as a result, there has been an emergence of global initiatives targeting IFCs and the tax and regulatory environments in which they operate. These initiatives centre on black listing, reputational risks, possible sanc- tions and an increased pressure for IFCs to raise their adherence to Organisation for Economic Co-operation and Development (OECD) proposed financial standards and tax information sharing practices. More recently too, the G-20’s action plan specifically addressed the use of low tax jurisdictions like Barbados. Small IFCs have been at the forefront of the OECD’s work on tax transparency and focus is now being placed on automatic exchange of information and base erosion and profit shifting. There is concern that these new initiatives might adversely affect the economies of developing countries. The move towards global tax information exchange is well underway with the introduction of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, to which more governments are signing up. Barbados' position has been that under its Double Taxation Agreements it could exchange information on request. The trend toward multilateral and automatic tax information exchange therefore challenges Barbados’ established response. As the global economy remains relatively fragile, control of the agenda for tax and financial transparency continues to shift - from the technocrats at the OECD to heads of developed nations - with the UK already declaring its protectorates as compliant and not tax havens. Additionally, Canada’s grant of exempt surplus treatment to countries with which it has tax information exchange agreements has placed Barbados under pressure in terms of the potential loss of revenue to competing jurisdictions. Another challenge is that small IFCs are largely unrepresented in international debates. There is limited opportunity to highlight the importance and salutary effects of IFCs to global economic growth through the promotion of trade and job creation. Barbados will continue to seek to make its concerns heard at the table through the development of stronger alliances with policymakers in the G-20 and OECD. Multifaceted relationships with major financial hubs will be a determinant of success and as the pace of globalisation accelerates, the development of relationships with more than one financial hub will assume increased importance. IFCs also need to be mindful that they may be required to have higher levels of transparency than their onshore counterparts and of the recent spin of investigative journalism to discredit most jurisdictions. Greater emphasis will therefore be placed on building a brand of excellence, making sure that there exists a repertoire of best practices, structures and services that are well known and used effectively. The changing environment presents an opportunity for Barbados to stay relevant and competitive as it competes with a growing number of offshore and onshore jurisdictions. Barbados continues to demonstrate a commitment to meeting international standards but will now refocus on maintaining its competitive edge. For example, while Barbados enjoys the highest standard of living in the Caribbean, it must also seek to achieve top ranking and position itself as the preferred jurisdiction of choice for discerning high net worth clients. Confidence must be built to ensure Barbados continues to be regarded as a world-class jurisdiction which offers a sophisticated array of market-driven, quality financial products and services. Therefore, Barbados will strive to sustain a solid reputation globally, to maintain a stable economy with a business-friendly and cost-effective environment, to adhere to global regulatory standards and readily participate in information exchange. Emeline Taitt Chief Executive Officer Invest Barbados Facing the Challenges while Building a Strong Brand Barbados continues to demonstrate a commitment to meeting international standards ... 2014 BARBADOS INTERNATIONAL FINANCE & BUSINESS 7 A single or multi-Family Office manages the financial and personal needs of wealthy families, ensuring that their wealth and values are protected and passed on to future generations. The purpose of the Family Office is to centralise the management of the family's assets, investments, tax, estate and philanthropic planning. The legal structure of the Family Office will depend on such factors as the complexity of the family's financial affairs; the tax domicile and residence of its principal members; the level of asset protection that may be required and, most importantly, the wishes of the family itself. Often, such families have diversified private fortunes accumulated over many years, which have complex multi-jurisdictional aspects. When a high net worth (HNW) family considers whether to set up a Family Office of their own or to use an existing and established multi-Family Office, the location of the actual office is very important. There are a number of criteria that a family considers when selecting a particular jurisdiction in which to establish their Family Office: • economic, political and financial stability • a beneficial tax regime • easy access to reputable financial service providers • good infrastructure • a highly educated, experienced and available workforce. The finance industry in Barbados is ideally placed to provide the widest scope of Family Office services and for these reasons, many international wealthy individuals and families have selected Barbados as a base for their operations. Today, Family Offices have seen increased demand for more specalised services, requiring them to expand their scope of service offerings and to include everything from bill paying, property management, oversight of yachts, private aircraft, artworks and other assets. They have become a “one-stop shop” for the resources, tools and technology that can protect and advise HNW families both in the immediate and longer term. Family Offices will call on a wide range of advisors and service providers to work together as an integrated team, to provide tailored and responsive solutions to the family's needs. Barbados has an abundance of professional service providers whose services meet these requirements. International Banks, Trust Companies, Wealth Managers, Tax Consultants, specialised Insurance Companies, (the Big 4), Accountants and Lawyers operating in Barbados are able to provide many of the spokes to this wheel, offering strong fiduciary services for the administration of Private Trust Companies (PTCs), Family Trusts, Foundations and other corporate vehicles. As a jurisdiction, Barbados continues to advance its corporate structures to meet the evolving needs of the international client, developing attractive and relevant solution-based initiatives in partnership with the industry. Recent enactment of Barbados Barbados: the Ideal Jurisdiction for Family Offices, Private Trust Companies and Foundations BY CAROLInE PROW 8 BARBADOS INTERNATIONAL FINANCE & BUSINESS 2014 Wealth Managementtrust legislation has brought about the development of alternative trust structures. The Private Trust Companies Act, 2012-22 and the Foundations Act, 2013-2, respectively, allow for the formation of PTCs and Foundations in Barbados, enabling families to have greater purview over their trust assets. A PTC enables the Settlor to exercise greater control and to have more discretion over the administration of the assets of the trust, providing greater flexibility and freedoms when compared to traditional trust structures. Similarly, the purpose of a family or private foundation is the protection of the assets of the family, the protection of privacy and tax optimisation. However, often only free investable assets are contributed to the structure, with the objective of safeguarding these assets for the next generation and to separate the assets from other assets of the Founder for asset protection purposes. The Founder can also retain the power to revoke the Foundation. The Foundation can deal with concerns about specific family members and provides a secure and stable resource for spouses and children. Foundations can also be used for charitable purposes. The Family Office, if required, can act as a member on the Foundation’s Board or act as an advisor or guardian. Effective September 2013, further enhancements were made to Barbados’ immigration policies, enticing HNW individuals (and their spouses) owning property in Barbados to apply for Special Entry and Reside Permits. The criteria for eligibility have been expanded, to include property and investment (foreign currency bank deposits, mutual funds or other financial instruments), and a new investment category of US$2 million has been introduced. Individuals who are tax resident in Barbados and remit foreign currency earnings are subject to a favourable tax regime. This presents an attractive choice for many non-domiciled families looking to relocate as a result of adverse changes and increased taxation imposed in other countries. Over the years, Barbados has been proactive in developing its infrastructure and legislation to provide a solid foundation for long term success, based on stability, consistency and objectivity, which wealthy families will require as they seek to preserve generational assets in uncertain times. F ... further enhancements were made to Barbados’ immigration policies, enticing HNW individuals (and their spouses) owning property in Barbados to apply for Special Entry and Reside Permits 2014 BARBADOS INTERNATIONAL FINANCE & BUSINESS 9 Wealth ManagementNext >