Reaction to repeal of International Companies Act

The countries of the European Union (EU) have received a heavy broadside from Grenada government ministers who are peeved at having to make amendments in Parliament to the island’s International Companies Act.

The Keith Mitchell-led New National Party (NNP) is not happy with the pressure being exerted by the EU’s Organisation for Economic Corporation and Development (OECD) that is threatening to blacklist the island as a non-cooporative country with harmful tax measures.

The administration was forced to take legislation to Parliament to repeal the International Companies Act CAP 152 as it has been deemed by the EU as being unfair and lacked a bit of transparency by the inter-governmental Code of Conduct group in business taxation.

Minister of Legal Affairs and Parliamentary Representative for the Constituency of Carriacou and Petite Martinique, Kindra Maturine-Stewart piloted the amended legislation at a recent sitting of the Lower House of Parliament.

According to Maturine-Stewart, as a result of the preferential treatment and incentives given to international companies over local companies under the International Companies Act, Grenada was identified by the EU group as carrying on harmful tax practices which have the potential to have a negative effect on the tax collection by the European Union.

“Mr. Speaker various countries, including our OECS neighbours were found to be deficient with respect to the criteria that were set out and as a result Mr. Speaker many countries made high level commitment to either amend or to abolish requisite regimes by December 31st, 2018”, said the female government member.

Maturine-Stewart stressed that the abolishment of the International Companies Regime will not significantly affect Grenada.

She said: “At present Mr. Speaker, barely any companies exist under this act. As a matter of fact, 84 companies are presently registered; unlike in St. Vincent and the Grenadines, Mr. Speaker, where over approximately 6000 of these companies are registered.

“Mr Speaker therefore, pursuant to section 3 of the Bill, International companies that have already been registered and incorporated under the International Companies Act are permitted to continue operations until 31st December 2022 or until Mr. Speaker, those companies are dissolved or wind-up prior to that time. Of course Mr. Speaker this is with the exception of international trust corporations who will be allowed to continue even after December 31st, 2022,” she added.

Health Minister and Parliamentary Representative for St. George South, Nickolas Steele gave support in principle but not unequivocal support for the repeal of the bill.
Steele contended that the powers-that-be in Europe have not told Grenada the law in its present form encourages illegal activities.

“…Mr. Speaker, the reason I support or will have to give support to this bill is because I am a representative of a developing country and it is necessary for us to make sure that we comply with the wishes of those who are setting rules internationally. That is our desire to comply with those who are setting the rules internationally with respect to international trade”, he said.

“We do not want to put forward a position of saying that we are a sovereign nation and therefore we do as we please and it harms us as a sovereign nation, developing. So, I support this bill because we are a developing country and it is necessary for us to remain in compliance with respect to international practices, international transactions”, he added.
Caricom affairs minister and Parliamentary Representative for the Constituency of St. David, Oliver Joseph charged that the EU is exerting pressure on a black country and was seeking to limit competition from developing countries.

Joseph told Parliament: “The only reason the EU is putting pressure on countries outside of the OECD (is) because we are able to compete with their jurisdiction. We say we going to move into international business and off-shore service and we start to become very competitive, earning revenue and they say well you’re doing too well …why the businesses leaving the OECD countries and coming to our jurisdiction to do business.

“…So as soon as you start to be competitive, they start to exert pressure on you – they tell you, you must diversify. We have taken a decision – this is the way to go – attract foreign companies to do business and then we are told that we have to change the law and abolish the international business that we want to set up to aid in the development of our economy”, he said.

Minister Joseph expressed fears that very soon the EU would mount an assault on Grenada’s passport selling scheme known as Citizenship By Investment (CBI) which is bringing in much-needed funds to help transform the economy.

He said: “We have a national transformation fund and we have due diligence and everything is in place, but they would find some way of telling you that you have to change as though Small Island Developing States cannot manage its own affairs – only the OECD and the developed countries that are capable of running this sort of business, black people like us should not get involved in that”.

Foreign Affairs minister and Representative for the Town of St. George, Peter David, echoed the sentiments of Minister Joseph, and called for Small Island called for Small Island Developing States to come together to put an end to the problem now being faced at the international level.

David told Parliament: “The only time we will see the end of this is when we as small states come together, when we as developing states come together, when we understand because one of the tactics of the countries who are imposing these things on us is divide and rule, so that we find ourselves unable to utilise the strengths that we have in demanding change to these phenomena.

“You know we have traditional allies and we have said to them time and time again that if they are truly our partners, then they must assist us in campaigning in the EU…so that … our interests are properly served. We must first understand where we are…there are people who said Grenada is being blacklisted – it means that the government is doing something wrong.

No, it doesn’t mean the government is doing anything wrong when you hear this blacklisting. In fact, many times when you hear they are blacklisting is because we are doing something right for our country.

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