In a drastic and desperate move, the Government butchered the controversial Income Tax (Amendment) Bill, deleting all clauses that required Opposition support to ensure its passage.
The bill, which the Government said was crucial to avoid this country becoming blacklisted and was necessary to ensure international financial transactions are not hampered, was passed just before 9 p.m. on Friday, with all Government members voting for it and all Opposition members voting against it. The final vote was 19-14.
This gives T&T some breathing room as it tries to meet deadlines for international tax regulation compliance.
Addressing the media at a press conference, Imbert said the he government will send the amended bill to the Global Forum on Transparency and Exchange of Information for Tax Purposes, letting them know it was the best that could have been done, and ask if it meets requirements. “We will most likely get a favourable response but we did the best we could,” Imbert said.
The vote in Parliament on Friday night met Global Forum’s requirement for the passage of the bill, he said, but Global Forum was only interested in proclaimed legislation.
Attorney General Faris Al-Rawi, also on Friday night, said T&T was able to “buy some time” by severing the bill in half. “As a result of the Opposition’s insistence that they will not support the legislation to treat with the Global Forum we specifically had to delete all the clauses of the bill that required a special majority,” Al-Rawi said.
Friday’s deadline was for the Financial Action Task Force (FATF) to re-evaluate T&T as a precursor for a meeting in February that will be held in Paris. FATF requires laws that allow law enforcement to access banking information that can highlight offences like fraud and proceeds of crime. In January, a group of evaluators from other member countries will review TT’s progress regarding the passage of the law.
The Government removed clauses 6-10 of the bill, which focused on demands from the Global Forum on Transparency and Exchange of Information for Tax Purposes, which requires sharing information between its 145 member countries.
The bill, inclusive of clauses 6-10, was a copy of the Foreign Account Tax Compliance Act (FATCA), a US government requirement passed after much debate in 2017. It required a special two-thirds majority to pass. Since it was unable to secure the Opposition’s support, the government, rather than pass no bill, watered it down so it could pass with a simple majority. The modified bill was passed 19-14 with no abstentions, six months after it was introduced.
Global Forum requires that TT not just pass but enact sections removed from the bill. Doing otherwise, Imbert said, will make T&T non-compliant with international laws and unable to receive the benefits of mutual sharing of information regarding money laundering and terrorism financing.
Al-Rawi said that the removal of the five clauses is not the end of the matter since the deleted clauses can make a comeback as part of any of the three laws needed to be passed to make the country eligible to sign an international treaty, similar to one attached to FATCA.
The three laws that need to be debated and enacted are the Income Tax (Amendment) Bill, the Mutual Administrative Assistance in Tax Matters Bill, and the Tax Information Exchange Agreements Bill. Unlike FATCA, he said, which is a bi-lateral arrangement with the US, this treaty can only be signed after the all the bills are made law.
Since only parts of the Income Tax Amendment Bill were passed, Government says the rest of the bill concerning Global Forum aspects will be brought back to Parliament early next year.
And for this second round, the T&T Chamber has sent a stern message to both Government and Opposition: no repeat of the recent long-winded process regarding the bill.
“No grandstanding and delays ahead – please,” T&T Chamber CEO Gabriel Faria added.
Imbert said,”Over the last month it became obvious the Opposition wouldn’t support the bill and one of the reasons appeared to be the clause allowing police easier access to tax information from Inland Revenue. But we agreed to their call to add judicial supervision in the situation.
“That clause was one of CFATF’s recommendations and we were able to pass that with a simple majority. If we didn’t, CFATF would have blacklisted us. It’s ironic that the clause that was passed with simple majority vote was one they had concerns about – they shot themselves in the foot. The clauses which required Opposition votes for passage and which we deleted were the information aspects Global Forum (GF) required.”
Imbert added, “We’ll now go to the GF on their aspects. They’re coming in January and we’ll get information and I’m sure we’ll have to do the bill over on their matters. I’m sure we’ll be back in Parliament with it by February. Hopefully, there’ll be no drastic situations.”
Chamber CEO Faria, who expressed happiness at the bill’s passage, said they were very concerned at the wasted energy in the matter.
“While Government made some concessions, if both parties had addressed it properly T&T would be much more efficient. So more maturity needs to be displayed – don’t wait until the last minute to address issues. That’s why we’re in situations like Petrotrin and WASA,” Faria said.
“It’s very stressful in an already difficult climate for business and consumers. Next rounds it must be better. Members have sent me copies of letters from banks who can no longer maintain accounts due to the country they’re in.”