The Caribbean Community (CARICOM) double taxation treaty

Sunday 18 June 2023

Christopher L Ram
Ram & McRae, Guyana


The economic unit known as the Caribbean Community (CARICOM) comprises 15 full member countries and five associate members. All the full member states, with the exception of Haiti and Suriname, share a common British heritage. These exceptions are joined by The Bahamas as countries not signatory to the Double Taxation Agreement[1], signed in 1994, to afford relief from double taxation, prevention of fiscal evasion and the encouragement of regional trade and investment. In their exercise of sovereignty, the full members have also signed double taxation treaties with countries outside the region.

There seems to be no logic in the choice of non-regional countries (NRCs) with whom member states have entered into double taxation agreements (DTAs), except perhaps the UK and Switzerland with whom eight CARICOM countries have signed such DTAs. Barbados leads the pack, however, with 29 DTAs with NRCs, while Saint Lucia has no such DTAs. The author could find no research studying the extent to which the bilateral DTAs with NRCs or the CARICOM Multilateral Tax Agreement has benefitted any of the countries, but there does appear to be some support for a publication by the International Monetary Fund (IMF) that raises questions about the real benefits of DTAs. The document also acknowledges some potential drawbacks of entering into a tax treaty for a developing country. For example, it may limit a country’s ability to raise revenue through taxation or lead to disputes over interpretation or implementation.

The CARICOM Double Taxation Agreement was signed in 1994 and bears close similarities to the United Nations Model Double Taxation Convention between Developed and Developing Countries (the ‘UN Model’) published in 1980, rather than the Organisation for Economic Co-operation and Development’s Double Taxation Convention on Income and Capital (the ‘OECD Model’), which was developed in 1963 by developed countries and largely favoured investors from those countries.

The impact

The CARICOM Double Taxation Agreement has had no amendments in its 29 years of operation and appears to have benefitted investors from Trinidad and Tobago and Jamaica, who have demonstrated a willingness to move out of their national comfort zone. Indeed, the Republic Bank, ANSA McAL and Massy of Trinidad and Tobago and Grace Kennedy of Jamaica are household names across the Caribbean, perhaps attracted by the zero per cent tax rate on dividends paid by a resident of a member state to a resident of another member state. What makes this provision most significant is that countries are forced to be exempt from income tax dividends paid to local shareholders as well.

One unique feature of the CARICOM Double Taxation Agreement is Article 5 on tax jurisdiction, which provides as follows: ‘Irrespective of the nationality or State of residence of a person, income of whatever nature accruing to or derived by such person shall be taxable only by the Member State in which the income arises, except for the cases specified in this Agreement.’

This Article contrasts with Article 23 on other income of the Guyana–UK Treaty, which provides as follows: ‘Items of income beneficially owned by a resident of a Contracting State, wherever arising, other than income paid out of trusts or the estates of deceased persons in the course of administration, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.’


While the CARICOM Double Taxation Agreement speaks of the carrying on of a business, it is unfortunately silent on that most important concept known as ‘permanent establishment’, an omission that causes businesspersons, accountants and lawyers endless headaches. Perhaps after 29 years, it is time to revisit this agreement.


[1] Agreement Among the Governments of the Member States of the Caribbean Community for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, Profits or Gains and Capital Gains and for the Encouragement of Regional Trade and Investment. Double Taxation Agreement - CARICOM.