FROM THE OFFICE OF PUBLIC AFFAIRS
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July 14, 2004
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Remarks by Treasury Secretary John W. Snow
at the Signing Ceremony for the U.S.-Barbados Income Tax Protocol
I would like to thank you all for being here today at this important ceremony. I would like to welcome our friends from Barbados who are with us today, especially the Honorable Dale Marshall, Barbados's Minister of Industry and International Business, who has traveled from Bridgetown in order to join me in signing this new agreement with respect to the tax treaty between our two countries. And a special welcome also to Ambassador King, who is someone we have the opportunity to see more often.
The United States has long had a close relationship with Barbados. Indeed, the history of our cooperation dates back to our very earliest days as a country. Barbados is not only a close neighbor of the United States, but also a close friend. Barbados also has earned recognition as a real leader in the Caribbean.
The current tax treaty between the United States and Barbados dates back to 1984. 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.
This Administration is dedicated to eliminating unnecessary barriers to cross-border trade and investment. Our income tax treaty network is the primary means for addressing tax barriers. Tax treaties provide benefits to both taxpayers and governments by setting out clear ground rules that will govern tax matters relating to trade and investment between the two countries. A tax treaty is intended to mesh the tax systems of the two countries so that there is little potential for dispute regarding the amount of tax that should be paid to each country and so that there is little potential for the double taxation that can arise when the two governments both claim taxing jurisdiction over the same income.
Today's agreement represents important improvements in the U.S.-Barbados tax treaty relationship. 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 U.S. 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. The applicable rules also have also been revised to reflect Barbados's position as a regional economic center. In sum, the protocol provides rules for the qualification for treaty benefits that are clearer and more effective.
I appreciate the hard work of everyone involved on both sides in completing this agreement. I am pleased to sign this Protocol today, which reflects our mutual cooperation and represents a major step forward in our relationship in the tax area. I look forward to this agreement being brought into force as soon as possible.
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REPORTS