Caribbean insurers mull tax proposals
Caribbean countries will struggle to adopt a global minimum tax on corporate profits because they are already reeling over anti-money laundering and terrorism financing compliance requirements, a leading insurer said.
Paul Traboulay, the chief operating officer and chief risk officer of the Caribbean-based Guardian Holdings Group, said the tax would present a challenge to many of the smaller, Eastern and northern Caribbean territories, with respect to compliance.
Guardian is a regional insurer, but Mr Traboulay is based in Trinidad and Tobago, where he said it would definitely be a problem.
The Caribbean country has vast quantities of oil and gas reserves which are the main source of wealth in the country.
Mr. Traboulay said: “We are working through a process of amending our rules around our supplemental petroleum taxation.
“It’s a much a larger issue than simply dismantling a taxation system to be transparent.”
He said the whole function of the economy was going to be affected by it and hopefully that will be in compliance very, very shortly.”
Proposals from the OECD (Organisation of Economic Co-operation and Development) that are being vetted by the G-20, could dramatically affect Caribbean insurers, because it may impact the companies that reinsure them, he said.
These were among the pressing concerns raised during the recent AM Best virtual Briefing - Caribbean Market Perspectives from the C-Suite, involving participation from AM Best analysts and regional insurance leaders.
Mr Traboulay said of the tax initiative: “Pressure is now being brought to bear on specific reinsurers, who are providing support to our insurers. That will create an additional challenge within a very narrow time frame. And it is a source of worry for the future.”
His comments came after the matter was first raised by Randy Graham, CEO of the Massy United Insurance.
From his Barbados office, Mr Graham said the OECD proposals were being watched closely by many in the region, particularly the southern Caribbean, because after tourism, international business is a key income driver for regional economies.
He said: “There are developments in the area of the OECD and taxes that could cause a dampening of GDP. What we need is some form of normalcy and then some form of stimulus and recovery to see an expansion in economic activity.”
He commented on the need for Caribbean insurers to focus on business retention and cash flow because of the need for access to US currency to pay reinsurance bills.