IR Global Doing Business Globally: Common Mistakes

IR Global

QUESTION ONE – REGULATIONS

Has the regulatory environment in your jurisdiction, as it relates to tax or audit services, created any misunderstandings for international clients? How have you resolved this?

Barbados, when compared to some jurisdictions, seems to bear higher costs due to its taxes (a sliding scale of 5.5% down to 1% per annum) and a legislative requirement for an audit of all public companies and private companies where the assets and or revenue exceed US$2 million. We resolve this by alluding to the fact that it was never the intention of Barbados to operate as a tax haven and therefore our focus was never on taxes. We built our international centre on double tax agreements and bilateral investment treaties for the benefit of Barbados and the countries we enter agreement with. With a population exceeding 280,000 we have always targeted multinationals with a real need for global expansion, using Barbados as a platform to enter markets. That could include technology skills, financial, logistics, warehousing or manufacturing. Barbados has a highly educated workforce with most of our professionals possessing postgraduate degrees and/or professional designations. We are home to large accounting firms (BDO, Deloitte, EY, KPMG, PwC) and many large global entities have set up banking and insurance offices here mostly staffed with local expertise.

QUESTION TWO – SCOPE OF WORK Does the nature, scope and pricing of accountancy work ever create misconceptions when working on a cross-border transaction such as a merger or acquisition? Any examples?

Yes. A large part of substance rules particularly for products and/or services with inputs across various jurisdictions require transfer pricing rules. Transfer pricing rules are not always easy to follow and it becomes our job as professionals (accountants, directors, etc) to interpret these rules to the best of our ability to the client. This may include various parties with different backgrounds so that they understand their impacts and the need to follow and track the corporate actions so that these rules are not undermining to the detriment of the entities and their shareholders.Doing Business Globally: Common Mistakes

QUESTION THREE – TERMINOLOGY Has the interpretation of professional terminology and language ever caused communication problems on a transaction you have been involved with? How have you subsequently handled this?

Yes. We as professionals become accustomed the various legal, accounting and other jargon. While it may be efficient to use these terms in describing transactions, particularly in documentation, we must remain ever aware that our clients come from different backgrounds and ensure that the language is understood by all. This can be achieved in many ways including getting feedback from all stakeholders and by illustrating the transaction, often in summary and then in step-by-step form (e.g. showing how the structure of a multinational will change after a sale or acquisition and illustrating the impacts in terms of operations gained or lost, taxes to be paid, etc), which can break down a large and sometimes overwhelming transaction into bitesize pieces for effective Q&A and understanding among all parties.