0

Bahamas 'Got Everything Needed' On Tax Exchange

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas “got everything we wanted” from this week’s OECD Global Forum meeting, with its stance on how the automatic exchange of tax information should be implemented accepted by the international community.

Ryan Pinder, minister of financial services, told Tribune Business yesterday that the meeting’s outcome had “validated” the Bahamas’ position that the automatic exchange of tax information occur on a bilateral, country-by-country basis.

He explained that this nation had stuck to, and obtained, “the position we always advocated for” - agreeing to adopt automatic tax information exchange as the global standard - but not signing on to the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Doing this would have committed the Bahamas to automatically exchange tax information on a multi-country basis, which Mr Pinder last week warned would have imposed “impossible obligations” on this nation and its financial services industry.

Blasting a Nassau Guardian article on the Global Forum meeting’s outcome as “not accurate”, Mr Pinder said the Bahamas had obtained the position he had outlined at last week’s Nassau Conference.

While the Bahamas has committed to starting the automatic exchange of tax information from 2018, and “acknowledged” this as the global standard, Mr Pinder said this was different from agreeing to adopt the OECD’s Multilateral Convention.

This, he explained, was the implementation method, a multilateral, multi-country basis for exchanging tax information, which the Bahamas has refused to sign up to.

“The Multilateral Convention was one way to implement the global standard on a multi-country basis, and we disagreed with this,” Mr Pinder told Tribune Business.

“The Global Forum met this week, and invited all members to acknowledge the global standard, which is a common reporting standard; essentially the concept of automatic exchange.”

Mr Pinder said that if a country did not commit to adopting the automatic exchange of tax information as the global standard, it “risked being identified as non co-operative” on this issue.

While the OECD and its leading members had not explicitly said so, Mr Pinder said being identified as non-co-operative could lead to nations being placed on ‘grey lists’ or ‘blacklists’.

This has happened previously, and the Minister added that this was a potential “slippery slope” that the Bahamas had to avoid by committing to adopt the automatic exchange of tax information.

With all countries given the choice of implementing this in 2017 or 2018, Mr Pinder said the Bahamas went with the later timeline “for a variety of reasons”.

However, when it came to the implementation method, the Bahamas balked at the Multilateral Convention route as promised by the Minister last week.

“We did no agree on the Multilateral Convention. We did not agree to implement multilaterally,” Mr Pinder told Tribune Business. “We chose a bilateral approach, agreeing to implement the standard on a country-by-country basis. That was accepted.”

This stance, he added, was effectively backed by other nations, including key G-20 nations and other major international financial centres.

“It’s important to note that after we put forward our position, there were a number of countries - which had committed to being early adopters of the standard - who changed their position to be 2018 adopters,” Mr Pinder added.

Such countries included Brazil, Australia and Canada, all G-20 members, and the likes of Singapore and Switzerland. The Bahamas now finds itself among 35 nations who have chosen to implement automatic tax information exchange in 2018, with 58 choosing to adopt this in 2017.

“We got everything we wanted out of it,” Mr Pinder told Tribune Business of this week’s Global Forum meeting, “and got the G-20 countries to back us up.

“We validated our position, and are in a position we have always advocated for.”

The Bahamas has opted for bilateral implementation, with Mr Pinder last week describing the Multilateral Convention as “fundamentally flawed” and imposing “impossible obligations” on this nation.

He told the Nassau Conference that the Bahamas would advocate for changes to the OECD-created ‘global standard’ for automatic information exchange to ensure this nation not only complied but positioned “ourselves for sustainability and growth” in financial services.

Mr Pinder revealed then that, if there were 80 signatories to the multi-country convention, the Bahamas and its financial services industry would need to instantly know structures designed to avoid tax in each of them - and provide the relevant information instantly.

“Tell me: Is that possible?” asked Mr Pinder. “That’s an impossible request on a multi-country basis, certainly for a country like the Bahamas.”

Explaining why a multi-country approach was not appropriate, Mr Pinder referred to the OECD’s own guidance, which said tax information exchange should not take place unless countries had legal and administrative frameworks in place to ensure the details provided were kept confidential and used properly.

Forcing the Bahamas to enter into automatic information exchange with multiple countries, the Minister warned last week, could expose it - and the financial services industry’s clients - to nations where details would be used improperly or shared with the wrong people.

This, in turn, could jeopardise the safety and security of clients.

“We in the Bahamas realise this more than others, as we have re-focused our industry in Latin America, in countries where many practitioners would say that the risk to personal safety of clients is real, and that a transparency agenda brings these concerns to the forefront,” Mr Pinder said.

“We believe that an objective case can be made for many of our key markets that this clause on confidentiality and use of information would apply, resulting in a lack of an OECD mandate for an automatic exchange agreement with these countries.

“In fact, to make the case that this clause would apply is fundamental to the survivability of a legitimate financial centre serving the Latin American market.”

Comments

GrassRoot 5 years, 11 months ago

I don't see the success, when you give away the candy shop and are getting paid in candy. I wonder whether the Bahamas gets automated exchange of information on accounts held by Bahamians in the U.S, the U.K., Switzerland or Panama. We also have to stop to believe that to have all these treaties in place is an asset. Its not, it is maybe a liability even. The treaties are only meant for execution. People will not bring money to the Bahamas because of automated exchange of information (well quite the opposite), they would bring money to the Bahamas to manage, if we had (I) good asset management, (ii) a secure and reliable judicial system, (iii) good products, and (iv) a solid economic environment. So these are the tasks that the Government needs to work on, everything else is just blowing smoke.

0

Sign in to comment