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Bahamas Targeting 2017 Start On Auto Tax Exchange Talks

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas is aiming to start automatic tax information exchange agreement negotiations a “full year” before it has committed to implementing the new global standard, a Cabinet Minister said yesterday.

Hope Strachan, minister of financial services, indicated that acting to meet its Common Reporting Standard (CRS) obligations ahead of schedule was the best way for the Bahamas to respond to “the very well-organised” attack now being mounted on its financial services industry.

Acknowledging that it was “crucial for us” to meet the timelines leading up to the Bahamas’ CRS implementation in 2018, Mrs Strachan expressed hope that the necessary enabling legislation, and accompanying regulations, would be brought to Parliament before year-end.

Once that was passed into law, the Minister said the Bahamas would seek to begin negotiations - on a bilateral basis - with countries wanting to automatically exchange tax information with it in early 2017.

“It is crucial for us to do it,” Mrs Strachan told Tribune Business of the need for the Bahamas to meet its CRS commitments. “The Task Force that is actually dealing with this, they are focused and have worked extremely hard to produce that legislation.”

The Task Force, which is effectively a private-public sector partnership (PPP), is led by the Attorney General’s Office and Ministry of Finance, the two government ministries that have primary responsibility for financial services regulation.

The draft legislation, and accompanying regulations, guidance notes, Tax Information Exchange Agreements (TIEAs) and relevant treaty instruments, are due to be released for industry consultation next month.

“When it comes to the legislation, we want to make sure we ‘dot the i’s’ and ‘cross the t’s’, and have regulations at the same time as the guidance notes,” Mrs Strachan told Tribune Business.

“We don’t want to leave anything to chance, and hopefully we will have that in place in time for the year-end. We’re saying to ourselves: End of the year, let’s have the legislation completed.”

Achieving that milestone would then allow the Bahamas to start negotiations with other countries desiring automatic tax information exchange agreements well before the 2018 deadline it has agreed for CRS implementation.

“That’s my hope, January,” Mrs Strachan said of the launch of negotiations, adding that the Bahamas was putting together “a team” for this purpose. “We will have a full year to do negotiations and work towards it.”

The Bahamas’ strategic response to the growing international pressure is thus to get ahead of the curve, with ‘offense the best form of defense’.

Such an approach has been privately advocated to Tribune Business by several financial services industry professionals, who have suggested that the Bahamas not wait until 2018 to start automatic tax information exchange talks.

They, too, have argued that the Bahamas ‘get ahead of the curve’ by starting CRS-related talks now with at least 40-50 countries, especially with the EU member states, who would have to be given ‘participating jurisdiction status’.

This would both show that the Bahamas is serious and ‘kill two birds with one stone’, given that it would help to address both Organisation for Economic Co-Operation and Development (OECD) and European Union (EU)concerns.

The Government, based on Mrs Strachan’s comments, appears to have taken this advice on board, as the Bahamas and its financial services sector comes under the most sustained, public international pressure experienced since the 2000 ‘blacklisting’.

Mrs Strachan acknowledged that the Bahamas was the victim of “a very well-organised attack”, which began with The Economist magazine portraying this nation as a non-cooperative jurisdiction that was undermining the global battle against “tax dodgers”.

This was swiftly followed by the European Union (EU) ‘red flagging’ the Bahamas on two of three criteria related to tax avoidance, and culminated in the ‘leak’ of 1.3 million documents - containing details on some 175,000 Bahamas-domiciled entities - from the Companies Registry.

“I call it attack because when you have forces from every sphere coming at you, and it’s done in a very organised and strategic way, and all seem to have the same agenda, it has to be an attack on us,” Mrs Strachan told Tribune Business.

She said that while the Bahamas’ bilateral approach to implementing the CRS was the ‘peg’ or ‘hook’ for this onslaught, those attacking this nation likely had broader, more sinister objectives.

“The OECD and the bilateral approach is the issue which they’re sort of hanging their hat on,” Mrs Strachan added. “I personally think the ultimate objective is to put us out of the financial services business.”

The anti-Bahamas media offensive to-date appears designed to force, or bounce, the Bahamas into abandoning the bilateral approach to CRS implementation - something that would allow this nation to exchange tax information automatically with those that approach it - rather than with all-comers.

While the OECD would clearly prefer all nations, including the Bahamas, to adopt such a ‘multilateral’ approach to CRS implementation, Mrs Strachan said the Bahamas had “made our position known since 2014”.

To suddenly change this stance now, she added, threatened to undermine the Bahamian financial services industry and cost it business.

“If you think about how people do business, and how businesses operate, you cannot just decide today or tomorrow to change course, as that has a lot of implications for people,” the Minister told Tribune Business.

Pointing out that the Bahamas’ approach to implementing the CRS global standard was agreed prior to her becoming minister of financial services, Mrs Strachan said: “We consulted widely with the industry, looked at our tax regime, all aspects of how the jurisdiction is managed, and determined which approach was safer for us.”

The OECD had itself provided, and approved, the bilateral approach for implementing the global standard on automatic tax information exchange, she added.

“To come back and vilify us for choosing this route seems very disingenuous,” Mrs Strachan said. “It’s beyond understanding why we are being attacked this way. It’s very well organised.”

Comments

observer2 2 years, 9 months ago

Obviously this drivel is for local consumption or our financial leaders don't have a clue of the global program. Let me tell you one more time "unilateral" automated tax exchange treaties will not work. The Bahamas needs a "multilateral" automated tax exchange treaty, period.

This is not a negotiation, this is a demand from the EU, G20, FATF etc.

So, the PLP and FNM can continue to talk nonsense and get black listed again and have all the correspondent banks pull out of thee country or we can start to co-operate with western civilization.

Also, could you please update the corporate database and make accessing it more easy and less costly and more useful...dese G20 people look like dey ain playin doll house wit yinna.

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observer2 2 years, 9 months ago

NEWS FLASH to the clueless PLP, FNM and DNA leadership and bone headed bankers lamenting the demise of last centuries Bahamian tax haven business. You are wasting your time with "unilateral" tax treaties. The world has moved into trading blocks (EU, NAFTA, ASEAN, Pacific Trade Agreement, G20 etc.). Individual developed world countries don't want to negotiate 40 plus tax treaties with each banana republic that asks for one. This is because in today's day and age of global trade unilateral treaties are useless in tracking international money laundering. Example. If they is a rogue with an African passport transferring the proceeds of crime using the international financial system how is an automatic tax exchange treaty with the UK going to help? It wont because its not a tax issue and the individual is not a UK citizen so the tax treaty is worthless. A "multilateral" exchange of information treaty is far more useful. In this instance the EU, UK or the US can automatically and quickly get information from all banks and corporate registered agents in the Bahamas on this rogues dealings in the Bahamas without having to figure out if they have a tax treaty with us and exactly what types of information the treaty covers. The tax treaty may not cover matters outside of tax evasion. So I would advise Hope to stop beating her chest about how unfairly the Bahamas is being treated. The global powers don't have time to waste about what you think about the treatment of the Bahamas. They want to stop international proceeds of crime from being hidden in the Bahamas. Either we comply or we continue to loose more and more access to the global correspondent banking system. Read what happened in Belize as correspondent banking relationships are systematically terminated in that country (link below). Our leaders are still under the impression that this can't happen in the Bahamas. But why risk it? Who's interest are they protecting? Why negotiate 40+ TIAs when one can do the trick. Who is getting rich off of this nonsensical negotiation? What is the cost of all those trips abroad to negotiate 40+ treaties? This is certainly not in the interest of average Bahamians who doesn't even know what a correspondent bank is. Maybe the perceptions in the recently released Poll that our leaders are more concerned with foreign interests is true?

http://www.caribbeannewsnow.com/topst...">http://www.caribbeannewsnow.com/topst...

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jus2cents 2 years, 9 months ago

ICIJ PUBLISHES LEAKED BAHAMAS INFO TO OFFSHORE DATABASE The cache of documents from the island nation’s corporate registry provides names of directors and some owners of more than 175,000 Bahamian companies, trusts and foundations registered between 1990 and early 2016.

https://www.icij.org/blog/2016/09/ici...">https://www.icij.org/blog/2016/09/ici...

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