Nearshore Americas
Caribbean tax havens

Global Minimum Tax Regime Threatens to Destroy Caribbean Tax Havens: Report

The global minimum tax, a new corporate tax regime under discussion among G-20 countries, has all the potential to deal a devastating blow to tax havens in the Caribbean.

Under the proposed plan, companies will have to pay 15% tax regardless of where they are incorporated, according to Bloomberg.

The new tax system is yet to be approved by G-20 countries as well as the Organisation for Economic Cooperation and Development (OECD).

Many Caribbean countries – including The Bahamas, the Cayman Islands, the British Virgin Islands, and Bermuda – charge no personal or corporate income tax, making themselves attractive for large global business groups to establish a subsidiary there.

The Cayman Islands, for example, has nearly 100,000 such corporations. According to Reuters, as many as 11,000 investment funds, representing more than 60% of the hedge fund industry’s US$3.8 trillion in assets, are registered on the island. Therefore, the financial sector alone accounts for almost 50% of the country’s economy.

The proposed tax system may “undermine the incentive for global companies to set up shop on storm-prone islands in the Caribbean,” reported Bloomberg, quoting an international tax lawyer.

Sign up for our Nearshore Americas newsletter:

The impact will be too huge to bear for the Caribbean countries, as it comes at a time when they are struggling to offset the economic loss caused by the COVID-19 pandemic on the tourism sector.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

1 comment

  • The global minimum tax, a new corporate tax regime under discussion among G-​20 countries, may deal a death blow. That is why the World Development Report 2006, the twenty-eighth in this avoidance of deprivation in outcomes, particularly in health, education