By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamas will eliminate all opportunities for tax dodgers to abuse its financial system by year-end 2020 with the launch of its Tax Residency Certificate (TRC), a Cabinet minister said yesterday.
Elsworth Johnson, minister of financial services, trade and industry and Immigration, said during his national address that The Bahamas will via the Certificate give access to financial accounts and income records for foreign residents in compliance with global standards.
"By the end of 2020, the Ministry will launch the Tax Residency Certificate," he said. "This certificate will enable expatriate residents and investors to prove that they are resident in the Commonwealth of The Bahamas.
"Through this certificate, we will provide access to financial accounts and income records according to the Organisation for Economic Co-Operation and Development’s (OECD) Common Reporting Standards (CRS). The end result will be the elimination of opportunities for those who seek to use our financial systems for tax evasion and avoidance purposes.
"We are in the consulting phase of the Certificate’s implementation and working to draw together the differing views of key stakeholders. This will ensure that the final version of the Tax Residency Certificate legislation is the best version possible. Our efforts have been universally hailed by local and international observers alike."
TRCs, which have been talked about for some years, would have their own taxpayer identification number (TIN) and confirm that the holder has been properly domiciled in The Bahamas. Besides confirming this is their main place of residence, these certificates will help certify the holder's compliance with their home country tax laws.
And they will also help to address OECD claims that this nation’s economic permanent residency product is in danger of being abused by tax evaders.
The OECD sparked major concern within the Bahamian financial services industry and wider economy in 2018 when it included The Bahamas’ key investment product on a list of regimes that could undermine global automatic tax information exchange.
Many viewed it as a further broadening of the OECD’s efforts beyond pure tax information exchange and transparency to investment products and regimes it deems potentially harmful to the global crackdown on tax avoidance and evasion.
The listing report called for “financial institutions to undertake enhanced due diligence on clients that are citizens or residents of countries with [investment citizenship or investment residency] programmes to prevent cases of [tax] avoidance and tax evasion”.
Apart from creating negative perceptions of The Bahamas in the minds of potential investors, the OECD listing’s demand for enhanced scrutiny, and likely extra costs, time and exposure involved, threatened to deter wealthy investors from applying for permanent economic residence - thereby undermining a key component of the foreign direct investment (FDI) regime that has been in place for decades.
Comments
observer2 3 years, 6 months ago
The TRC is a worthless piece of paper that the OECD will see straight through.
Most foreigners don't keep their money or investments in Bahamian banks or brokerage houses.
They normally will have a Caymanian company which will then hold brokerage accounts elsewhere in the world.
The theory goes as follows (1) Live in the Bahamas (2) title your assets in Cayman and (3) bank in europe.
The TRC will be silent on the Cayman corps and european bank accounts.
Unless the foreigner wants the Bahamian government to know how many billions they have around the world. Turnquest will need to tax them once he figure out how much and where they are!
WAKE UP BAHAMAS....lets do some real industries like fish, farming, light manufacture, instead of trying to live off foreigners and tourist.
rodentos 3 years, 6 months ago
they want to know where Bahamians have their monnies...
BahamaPundit 3 years, 6 months ago
Or how about just stop stealing the money we do have and borrow on behalf of the Bahamian people. At least 50% of the 10 billion dollar debt was wasted on corruption.
happyfly 3 years, 6 months ago
The Bahamian Government needs to stop trying to impress these OECD clowns along with the FATF and other 'globalist' agendas. The UK is leaving the EU and there is a very good chance the US is going to decouple from the new world order. If and when that happens, the Bahamas needs to align itself with the US and UK and screw up all of the other tax exchange treaties and tell the OECD to take a hike. As observer2 says re. Cayman. These UN organizations aren't out to be fair. They are screwing all the small countries for their own benefit by behaving like bullies but without the US and UK standing behind them, the bullies lose their power.
BahamaPundit 3 years, 6 months ago
Well said.
rodentos 3 years, 6 months ago
I really do not like to say this but Bahamas would have been probably better if remained UK territory. As "independent nation" nobody stands by if needed. Does anyone talk about Anguilla for instance?
JokeyJack 3 years, 6 months ago
This is a pile of foolishness to make the OECD happy. It is disguised as trying to deal with tax evasion in the Bahamas. It is not. It is dealing with tax evasion in Europe.
We know about some foreigners avoiding property and hotel taxes here, and we could simply enforce the law ..... but no .... let's' create another piece of garbage with two dozen people filling out forms all day, leading to nothing.
The Bahamas needs to give ALL Europeans 5 years to sell and vacate the Bahamas, and say by June no more flights allowed from Europe or anyone with EU passport (except for UK cause Queen is head of state).
The benefits of a relationship with Europe FAR outweigh the pain in the neck.
rodentos 3 years, 6 months ago
the joke is WHO is OECD? Did anybody vote for them? It is not an elected organization, more rather a mafia like "club" enforcing their rules. How does life in the Bahamas relate e.g. to living in Paris? Do we have l'Ouvre here or first class highways and so on that would justify france's 75% taxes? you see what I mean?
avecbundy 3 years, 6 months ago
Well said eveyone especially the suggestion that the Bahamas care about and only align itself with the USA and UK. Tell Eurpoe and the OECD to eff off. Who the heck do they think they are? Quite annoying. The OECD may ban European products and citizens from coming here but those products and folks will ALWAYS find a way. Good riddens. Just do NOT understand why the Bahamas Government(s) is / are so quick and happy to comply with the unreasonable requests of these European jokers.
rodentos 3 years, 6 months ago
because if you do not comply you will be cut off from intermediary banking relationships then game over no buck will ever leave Bahamas.
FrustratedBusinessman 3 years, 6 months ago
The government needs to grow a spine and tell the EU/OECD to take a hike. The AML/CFT regulations that they have imposed in the past ~5 years are borderline insane, and they are not going to stop harassing the Bahamas until there is a corporate and income tax structure in place. The EU needs to go clean up their own house by clamping down on the Netherlands before they open their mouths about our financial regulations.
I cannot decide whether I hate the EU or the UN more; one has almost completely wrecked our financial services industry, and one is too busy trying to make Bahamians a minority in our own country by pressuring us to be flooded with Haitian refugees.
While the EU are at it, tell them to investigate the irregularities in Serbia's recent elections before they try to overthrow the Belarusian government. The hypocrisy of the EU knows no bounds, the UK was very wise to pull out of such a trash-tier organization.
rodentos 3 years, 6 months ago
EU is a shithole, remember cum-ex? Billions stolen from taxpayers with government's approval basically.
FrustratedBusinessman 3 years, 6 months ago
You should see what goes on in Canada, the Liberal Party is on the same scale as the PLP when it comes to blatant corruption. A few more years and Trudeau will be able to leave office with half of the Bank of Canada while ignorant Canadians keep voting him in to stick it to the "orange man" in America. Conservatives with their evil checks notes government accountability.
BONEFISH 3 years, 6 months ago
You obviously don't understand Canadian politics. It is not as simple as Bahamian politics.
Justin Trudeau has a minority government. The Progressive Conservative Party can't win in Canada 's two largest provinces, Ontario and certainty not in Quebec. They also can't win in the Atlantic Provinces and not also in British Columbia. Canada for the time being at the federal government has basically regional parties in it's federal parliament.
Also ask Canadians what happen to the Conservatives after Brian Mulroney left office and the accusations against him.
Bahamians love politics and power but don't understand governance and management.
FrustratedBusinessman 3 years, 6 months ago
You are telling me, someone who has lived in Canada, that I do not understand Canadian politics lol. Get a grip.
Trudeau has a minority government, but would more like than likely be able to secure a majority if an election were called today. I guess WE Charity and SNC Lavalin were just coincidences and not a part of a trend that is blatantly apparent with him by now. I guess the attempt to turn the creation a corruption investigation committee into a no-confidence motion is just alright and a wonderful ethical move to make. Force an election that we will probably win or let our grifting go unexposed. Sickening.
Are you sure that you know Canadian politics, because if you did you would know that Southern Ontario is pretty much a CPC (the federal PCs no longer exist either, the PCs only exist on a provincial level today, just another correction) stronghold. The same thing with interior BC. Vancouver, Toronto, and Montreal are the only reasons that the Liberals will continue to rule Canada until the world ends. The people living in areas are far more worried that O'Toole may allow doctors to take a pledge not to perform abortions than their government stealing their tax money from under their noses. If you lived in those areas, you would understand. For 99% of those people, the CPC are the big evil bastards because the CBC said so. For the record, every move the CPC makes is compared to Donald Trump (despite the CPC being more left-wing than the Democratic Party of America). It is a tried and true LPC tradition to smear the CPC by painting them as the Canadian equivalent of the GOP, even though that is such a blatantly false, simplistic, and moronic comparison, yet the people living in those cities gulp it up like a hot cup of Tim Hortons.
observer2 3 years, 6 months ago
Well put Bonefish. “ Bahamians love politics and power but don't understand governance and management.”
Canada 🇨🇦 is a beautiful country and most educated young Bahamians that go there never return to the Bahamas if they can take the cold.
banker 3 years, 6 months ago
Before I left the banking/wealth management scene in the Bahamas, I presiding over the large capital outflow of foreign wealth in our history. I personally had to transfer accounts of two billionaires, who packed up their bags and left. They sold their real estate holdings, closed their brokerage and bank accounts and left. And this was before COVID. Having a Bahamian bank account is worse than having a Panama bank account in the eyes of tax jurisdictions around the world. Having a Bahamian Tax Certificate will do more harm than good to those holders of them. A previous commenter was right. A good majority of those permanent residents bank and have their wealth management elsewhere -- notably the Cayman, or increasingly, the Netherlands Antilles. The government of the Bahamas and the Bahamian economy is seen as a too-large risk in many ways to keep your wealth here. It is why our financial services industry is slip-sliding away. It is no longer profitable for foreign (Swiss and otherwise) firms to do business here.
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