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Oecd Alters Rules For Bahamas ‘Half Way Through Game’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian QC yesterday accused the OECD of “changing the rules half way through the game” by attempting to force this nation into abandoning its preferred approach for implementing automatic tax information exchange.

Brian Moree, senior partner at the McKinney, Bancroft & Hughes law firm, told Tribune Business that the OECD, the world’s tax information overseer, appeared to have performed a remarkable ‘u-turn’ on the rules it had itself set for global Common Reporting Standard (CRS) implementation.

Having allowed countries to choose whether to implement the worldwide automatic tax information exchange standard on a bilateral or multilateral basis, Mr Moree said the OECD was now telling the Bahamas that it “cannot exercise its sovereign rights” to select the former approach.

The well-known QC added that The Economist article, which portrayed the Bahamas as a non-cooperative and non-compliant jurisdiction in the fight against “global tax dodgers”, was likely only the first salvo in a sustained campaign of pressure against this nation.

While suggesting that it was “a little hyperbolic” to believe this was another step in a wider campaign to drive the Bahamas out of the financial campaign, Mr Moree said it was “unfair and premature” for the OECD to seemingly assume this nation would not fulfill its CRS commitments.

“It seems to me that the persons behind this article are certainly trying to pressure the Bahamas into abandoning the bilateral approach and adopting the multilateral approach,” Mr Moree told Tribune Business of The Economist’s September 10 publication.

“That, to me, seems to be moving the goal posts half way through the game.... This would seem to be an effort by certain parties to change the rules as they apply to the Bahamas, where they are saying we no longer have the option to go bilateral, and we have to go multilateral. That would be inconsistent with the OECD’s own guidelines.”

The Bahamas and its financial services industry have grown used to sudden rule changes and impositions over the past two decades, as the OECD and its fellow travellers mould the global financial system to their liking, seeking to put international financial centres (IFCs) in their place.

Mr Moree, like many in the financial services industry, indicated that he viewed The Economist article as an OECD ‘plant’ and attempt to ‘bounce’ the Bahamas into adopting the organisation’s preferred method for CRS implementation.

For the magazine described the Bahamas as “chief among the recalcitrants” who had not agreed to the automatic exchange of tax information on a multilateral basis.

Agreeing to this would require the Bahamas to exchange tax information on the financial services industry’s foreign clients with all signatory countries - more than 100 - instantaneously.

Instead, the Bahamas has agreed to implement the CRS on a bilateral basis, meaning it will negotiate agreements one country at a time with nations seeking to automatically exchange tax information with it.

Both the Government and the Bahamas Financial Services Board (BFSB) have argued that the bilateral approach, which has also been selected by the likes of Hong Kong and Singapore, is better suited to this nation’s system of indirect taxation.

However, the Bahamas has now been singled out as the ‘main threat’ to the global tax information exchange and transparency network that the OECD is trying to build.

Mr Moree yesterday said it was hard to understand the basis of the complaints in The Economist article, which appeared to pre-judge the situation and automatically assume the Bahamas will fail to meet its CRS commitments.

“The foundation of the complaint seems to be that the Bahamas is using the bilateral approach as a pretext to obfuscate and navigate around the effective implementation of CRS,” the QC told Tribune Business.

He added, though, that there was no information or data - certainly nothing that was presented in The Economist article - “that would justify the assumption that the Bahamas has made a decision to drag its feet or otherwise frustrate the effort to implement CRS”.

Mr Moree said the Government’s own public pronouncements directly contradicted the magazine’s assertions, given that it had repeatedly committed the Bahamas to implementing the CRS by 2018.

He added that the “enabling legislation” to facilitate the automatic exchange of tax information, along with the regulations, guidance notes, guidelines, Competent Authority Agreement (CAA) and agreement (TIEA) templates, were currently being drafted via a public-private sector partnership.

“There appears to be no rational basis for the assumption that the Bahamas is going to miss implementation of CRS, or delay its implementation in this country,” Mr Moree told Tribune Business.

“It is hard to see where that concern is coming from. What makes this even more curious is that the OECD itself has provided alternative approaches to the implementation of CRS, one being a bilateral approach and the other being a multilateral approach.

“I have difficulty in understanding how we can be wrong, or a country can be justifiably criticised for exercising its sovereignty,” Mr Moree added.

“It decides which of the two options it wishes to take, bearing in mind both options have been approved by the OECD itself. We are doing no more or no less that what the OECD has approved. It’s difficult to understand how, in view of that, we can be criticised. The Bahamas has done nothing that is not in compliance with OECD directives.”

The OECD is a forum through which the world’s major industrialised nations, namely the G-7 and G-20, work to achieve their international tax transparency and compliance objectives.

The Bahamas has been in its sights since the mid-1990s, when it was first developing the concept of ‘harmful tax competition’, an initiative that paved the way for its current automatic information exchange drive.

Given the powerful nature of the OECD’s ‘backers’, and their belief that they are losing hundreds of millions of dollars in tax revenues to international financial centres (IFCs) such as the Bahamas, this nation will not be able to ignore their concerns.

And Mr Moree agreed that further pressure will be brought to bear, both directly on the Government and indirectly via the media, in a bid to force the Bahamas to accept a multilateral CRS implementation.

“I absolutely would expect that there will be further attempts to get the Bahamas to change to the multilateral approach,” the QC told Tribune Business.

“What is uncertain, and what is not clear, is why they seem to have concluded that the bilateral approach is not acceptable for the Bahamas.

“For whatever reason, persons in higher places have now decided they want to get the Bahamas to go multilateral. Now they have commenced a campaign to achieve that objective.”

Mr Moree urged the OECD and other outside observers to “give the Bahamas a chance to deliver on its commitments”, and only criticise and take further action if it missed implementation deadlines and obligations.

Comments

Well_mudda_take_sic 3 years, 8 months ago

Re-post: It is readily apparent that John Rolle is in way over his head as was the case for his predecessor Wendy Craigg. He is sorely lacking in the core competencies and relationships necessary within the local and global financial communities to carry out his mandate as Governor of The Central Bank. As a result, he is unable to stand up to the political pressures exerted on him by Christie as PM and Minister of Finance and this does not bode well for disciplined monetary policy and the proper regulation of both our local and offshore banking sectors. A weak Central Bank Governor who fails to act in the country's interest as opposed to Christie's own interests spells serious trouble for all of us going forward. One only has to look at Wendy Craig's dismal and very costly failure to stand up to Christie's shenanigans at the Bank of The Bahamas to understand why a weak Governor suits Christie just fine but will unhinge or possibly shutdown our financial system from the rest of the global financial community. Right now the global financial community views the Bahamas and the corrupt Christie-led government as a most serious threat to the global anti-money laundering initiatives that have been put in place over the last 15 years or so. Of course the fatal mistake here was Christie's decision to "take funds" from the numbers' bosses in exchange for ignoring the outcome of the national referendum held on "legalizing" the corrupt racketeering and other criminal activities of the gaming web shops operated by the likes of Craig Flowers and Sebas Bastian. There is little John Rolle can do to right the ship that Christie seems hell bent on sinking! At best, Rolle may be able to do something to relieve Bahamians from the outrageously oppressive bank fees that local banks are now charging Bahamians which force many Bahamians to deal in much less costly cash transactions outside of the banking system.

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killemwitdakno 3 years, 8 months ago

I don't think The Economist is to be blamed for labeling. They quoted the OECD. Many of their readers are offshore account holders and they perhaps write many tips on how to legally save on taxes. It may be that they are showing the duplicity and are sharing the warning , posed on how we'll hold up.

The US is one of the few countries who have not signed on to OECDs conditions ( conditions inspired by FATCA hello).

Nevada-Rothschild-Fonseca connection. They want it all.

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concerned799 3 years, 1 month ago

Fundamentally, where is the legal obligation of the Bahamas to even have to speak to the OECD?

As a foreign not for profit organization it has the right to send a letter to the Bahamas advising of whatever policy it suggests, nothing more.

The presumption there is any "obligation" as such owing to the OECD anymore than any other non Bahamian lobby group has no basis in international or Bahamian law.

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