Saint Lucia’s Inland Revenue Department (IRD) and CARICOM, in association with the Organisation for Economic Co-operation and Development (OECD) and the World Bank Group, conducted a four-day regional workshop on ‘Foundational Transfer Pricing.’ The training workshop brought together Technical Tax Administration and Ministry of Finance officials from the Caribbean to learn the underlying transfer pricing principles and discuss potential legislative and administrative considerations to address transfer pricing.
Tax Advisor with the OECD and Workshop facilitator, Diego Gongalez remarked that transfer pricing tackles tax evasion. He added that countries who have implemented the measure noticed evasion levels reduce and collection levels increase.
“What most multi-national companies do is tax evasion, tax avoidance, and avoidance is making sure that they can move around the gaps the legislation has in different jurisdictions for their benefit. So they’re not doing anything illegal but it hitting really hard the coffers of the developing countries.”
The knowledge sharing and case studies from this workshop aim to build the capacity of regional and local participants to identify and close gaps in existing legislation and help formulate new transfer pricing legislation. Comptroller at the Inland Revenue Department, Marcia Vite says this training will build on prior knowledge to ultimately improve tax collection.
“We have no specific legislation to deal with transfer pricing. However, our income tax act does have an element of it and therefore it is being practiced already. We want to delve deeper into it to have more understanding because you would understand that there would be new staff coming on and persons would have to continue that regime of understanding different aspects of taxation, transfer pricing being one very important aspect.”
In endorsing the workshop, Permanent Secretary in the Department of Finance, Francis Fontenelle stressed that though transfer pricing in itself is not a bad practice, it can, however, be used inappropriately, especially with the collection of taxes.
“Saint Lucia and many of the jurisdictions represented here today have a significant number of companies that are part of conglomerates which have multi-national companies. As such there is scope for the use of transfer pricing to inappropriately influence profits declared whether it be in Saint Lucia, in your jurisdiction, or otherwise. These transfer pricing risks remain and there is a need to not only build capacity but also an appropriate compliance framework in an ever-evolving transfer pricing environment.”
Francis added that a more robust transfer pricing framework coupled with enhanced capacity-building exercises will lead to greater synchronization of transfer pricing policy. This he said should ultimately lead to higher tax compliance and tax revenues. Sabine Wahl from the World Bank Group was the other Tax Consultant facilitating the workshop. The Foundational Transfer Pricing Workshop for the Caribbean was held at the Finance Administrative Centre in Pointe Seraphine from Tuesday 13th – 16th June 2023.