The main purpose of the CSME
is to allow the free movement of goods, services, capital and CARICOM nationals
and to regulate the treatment
of economic enterprises within the Single Market.
CARICOM Heads of Government
have recognised that the harmonisation of taxation is an important step
in the achievement of the CSME as failure
to do so is likely to result in barriers to the free movement of goods
The existence of the Treaty is clearly a step in the right
direction towards tax harmonisation. However, in order to achieve real
some measure of uniformity in the way in which taxable income is calculated
as well as harmonisation of tax rates within the various Member States
will be necessary.
The Intra-Regional Double Taxation Agreement replaced
the 1973 tax Agreement which was previously concluded between the more
developed countries ("MDC")
within CARICOM, i.e. Barbados, Guyana, Jamaica and Trinidad and Tobago,
and the less developed CARICOM countries ("LDC"), being Antigua,
Belize, Dominica, Grenada, Montserrat, St. Lucia, St. Vincent and St.
Kitts, Nevis and Anguilla.
It was hoped that the Treaty would be more
successful in its implementation and effect than the LDC/MDC Treaty
which was never formally ratified,
or honoured, by all of the countries that were parties to it. In any
event, the LDC/MDC Treaty was limited in its scope as it was designed
only to try to stimulate international trade and investment between
the MDCs and LDCs, and not among the MDCs themselves.
The Treaty was intended
to encourage and facilitate trade and investment between residents of
all Caricom member states who ratified the Agreement
by removing the barriers which previously existed, mainly because of
the high effective rate of tax levied on income derived from one Caricom
territory by a resident of another.
Taxation of persons:
CARICOM Nationals must be cognisant of the fact that they are subject
to all applicable Tax Laws of their host country. It is therefore important
to have knowledge about the types of taxes to be paid, before moving
to work in another Member State.
The intra-regional Double Taxation Agreement
protects self-employed CARICOM Nationals from paying taxes twice on the
same earnings. This
Agreement is currently enacted in Antigua and Barbuda, Barbados, Belize,
Dominica, Guyana, Jamaica, Saint Lucia, St. Vincent and the Grenadines
and Trinidad and Tobago.