The Use of General Anti-Avoidance Rules as Quasi-Transfer Pricing Control Mechanisms in the Commonwealth Caribbean

Abstract

In spite of being deemed non-cooperative jurisdictions for the purposes of taxation by the European Union, the member states of the Caribbean Community (CARICOM) maintain the ideals of taxation autonomy in dealing with their fiscal affairs. With Jamaica being the only CARICOM jurisdiction that has enacted comprehensive transfer pricing legislation that complies with the OECD Guidelines, other Member States have sought to use general anti-avoidance rules (GAAR) to manage and assess this type of transaction. These GAAR are encompassed in the statues of the various Caribbean jurisdictions and tend to be interpreted purposively in order to capture instances of tax arbitrage through transfer pricing. This article will assess the policies existing in three CARICOM nations – Guyana, St. Lucia, and Trinidad and Tobago – and determine their effectiveness in addressing the implications of base erosion and profit shifting in transfer pricing.