Fri | Aug 17, 2018

Bahamas to be blacklisted as tax haven

Published:Wednesday | March 14, 2018 | 12:00 AM
Prime Minister of The Bahamas Dr Hubert Minnis.
Storm clouds form a haze around the Bahamas capital of Nassau in this October 6, 2016 photo. The Bahamas is currently under a cloud with plans by the European Union to consider blacklisting the country as a tax haven later this week.
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The minority opposition Democratic National Alliance, Arinthia Komolafe, on Monday accused the European Union of shifting the goalpost and urged the Bahamas government to develop a financial services growth action plan, or FSGAP, to deal with the threats of being blacklisted as a tax haven.

It followed a statement from the Hubert Minnis-led administration that they were caught by surprise by plans to recommend the inclusion of The Bahamas on a list of non-cooperative jurisdictions for tax purposes.

The EU's Code of Conduct Group (COCG), plans to make the recommendation to the Council of the European Union later this week.

Finance Minister K. Peter Turnquest said the government learned of the decision, amid ongoing talks.

"Throughout this process, The Bahamas has consistently been engaged with the OECD and the COCG on the EU listing criteria - including as late as last week. Therefore, this latest move is particularly surprising to us," Turnquest said in a statement.

Komolafe also said the EU decision was both surprising and disappointing.

"In the aftermath of the recent efforts made by the government to avoid the blacklisting of our nation, it is clear that the age-long practice of international and multilateral agencies continuously moving the goal-post is still alive. The Bahamas dodged the proverbial bullet when the initial list was published in December 2017 due to the devastating storms that impacted the Caribbean in 2017," she said.

 

DEEMED INADEQUATE

 

Since then, The Bahamas had also signed on to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement, and also joined the Inclusive Framework on Base Erosion and Profit Shifting, or BEPS, in December 2017, she added.

"However, these actions have been presumably deemed inadequate by the COCG. Having addressed the criteria on transparency and anti-BEPS measures, it remains unclear how the government intends to address the issue of fair taxation as highlighted by the EU," Komolafe noted.

She said, however, that while it will force the Bahamas to address its system of taxation and chart a course for the financial sector, it also offers an opportunity to carry out comprehensive tax reform that would move towards a progressive and more equitable tax system for Bahamians.

"The overall net effect of this reform should not complicate the ease of doing business or increase the cost of doing business in The Bahamas for Bahamian businesses. We are already burdened by several taxes, fees and levies without the necessary prudence, accountability or improved infrastructure to show taxpayers," said Komolafe.

"Due consideration should be given to the reclassification or modification of existing taxes. A prime example is the business licence tax which is currently assessed on gross revenue rather than net profit," she added.