Art. XXX(3) of the Canada-Barbados Treaty provides that the provisions of Arts. VI to XXIV of that Treaty do not apply to any person or other entity entitled to any “special tax benefit” in Barbados under indicated statutes including the Insurance Act (Barbados). The Barbados general corporate income tax rates range from 5.5% on the first BBD 1 million down to 1% on amounts in excess of BBD 30 million; whereas under the Insurance Act, the corporate tax rate on all insurance companies with a Class 2 licence (which permits the company to insure third-party risks wherever situated) is 2%.
Does the 2% rate constitute a "special tax benefit" within the meaning of Art. XXX(3)?
CRA indicated that the preamble to Art. XXX is broadly worded, making reference to “any special benefit” received by any person or other entity under the Insurance Act or any “substantially similar law.” Given that there is a tax regime in Barbados that is specific to insurance companies, a Class 2 licensee is considered to receive a special tax benefit for the purposes of Art. XXX(3), so that it would not be entitled to the benefits provided under Arts. VI to XXIV.