Some time ago I was reading a Barbados Underground post on the private military company Blackwater. At some point Adrian Loveridge commented about a related company, Greystone SRL, being registered in Barbados on 3rd September 2007.

This prompted me to research Barbadian SRLs, or Societies with Limited Liability. I was amazed at what I found.

 

SRLs - Ripe for Abuse

I went to the site Barbados.org which has a page dedicated to SRLs. Here are some of the juicy bits:

[Some of the] Benefits of this statute, in conjunction with other relevant benefits are:

  • Tax on income on a sliding scale, from a maximum of 2.5% to a minimum of 1%
  • Exemption from all withholding taxes
  • No capital gains tax or estate duty
  • Complete freedom from exchange control
  • Books of account may be kept outside Barbados
  • No minimum capital or ‘thin capitalisation’ rules
  • Bearer shares are permitted
  • An SRL may import, free from all customs duties, machinery or materials for use in its business

As I read it you don’t need to “front” any money to start an SRL, and you can keep the books in a shoe box in the Caymans. Income tax - 1%! Pay no duty! If your SRL company is worth less than a million Barbados dollars (USD$500,000), then you don’t have to bother with annual returns! No audits required! Besides, many domestic Barbadian companies don’t bother to file financials. The Government does not seem to care.

Here is the really good news! Your share certificates may not have your name on it! This is bad news if the big boys beat you up and take your certificate, because it’s like a dollar bill - whoever holds the certificate owns the shares.

The use of bearer shares, for example is a classic strategy of exchanging ownership of companies without a paper trail of transfer, and therefore tax. What is a bearer share? If you are in the UK pull out a bank note and you will see “promise to pay the bearer…” The very notes in your pocket are bearer notes meaning that whoever has the ten pound note in their hand owns it and it can be exchanged for goods and services. It is the same with bearer shares.

I can understand the legitimate need for a private military company to have absolute secrecy, but others desire secrecy for other ends. The International Narcotics Control Strategy Report, 1998 had this to say about bearer shares:

Bearer Shares: These are certificates of corporations, the ownership of which passes with the certificate itself. In this column, no distinction is made between bearer shares of IBCs or offshore banks. Bearer shares, when issued by an IBC, and when further insulated by a simple conveyance known as the “mini-trust,” through which control of the IBC has been passed to the beneficial owner, provide nearly impenetrable layers of anonymity for the ultimate beneficial owner of the assets.

How Could this Possibly be Legal?

A Brookings Center for Public Policy Education/Caux Roundtable hosted Dirty Money: Nourishing Poverty and Terrorism. Hear what Robert M. Morgenthau, District Attorney for New York County, New York, had to say:

And that really to me is symptomatic of what’s been going on, you know, whether it’s setting up a headquarters of a company like Tyco, alleged headquarters, in Bermuda, or saying that a company is controlled and managed in Barbados — legally controlled and managed in Barbados even though there’s one meeting there a year. I mean, those are fictions. In the prospectus, in one that was recently issued it says, “legally managed and controlled in Barbados.” If they took the word “legally” out it would be a fraud, but because they say legally, then they say, well, Barbadian law says it’s legal so therefore it’s legal.

Our concern of course is that not only the money is used for drug money laundering, for terrorist activities, for undermining the capital system, but also for undermining the whole tax system.

Politicians make the laws. They can pass whatever law they please, as long as it is not extremely at variance with the Constitution. They can choose not to be held accountable. Will Integrity Legislation be enacted anytime soon?

Are Barbados-Based Offshore SRLs Depriving the US of Billions in Taxes?

No Barbados office, no Barbados telephone, no business transacted in Barbados and books kept elsewhere. How would anyone know what is going on?

During the Palin-Biden debate, the only time I saw a flash of anger in Senator Biden is when he made a remark about companies taking a post box overseas. The Democrats want to raise taxes on American corporations. Offshore companies will be a big loophole that they will be looking to close.


Correction: Barbados.org is not an official Government site.

Coming: Suspicious Activity Reports (SARs) and what the Barbados Government is doing about them.