By NEIL HARTNELL
Tribune Business Editor
Bowing to international demands to automatically exchange tax information on a multilateral basis is a “real no brainer” for the Bahamas, a financial services executive argued yesterday.
Paul Moss, president of Dominion Management Services, told Tribune Business that the Bahamas had little choice but to implement the Common Reporting Standard (CRS) on a multilateral basis if it wanted to avoid a threatened ‘blacklisting’ by the European Union (EU).
Suggesting that the Bahamas would suffer no competitive disadvantage if it altered its CRS implementation policy, Mr Moss said: “I just think we ought to act prudently and go and sign the multilateral agreement.
“It doesn’t take anything away. If the Europeans are threatening to come in and blacklist, we’ve got to comply with it, notwithstanding that the OECD agreed the bilateral approach and we signed off on it.
“Ultimately, the sector depends on having these agreements in place, and if that’s what they’re demanding to get into their markets, we have to comply with that. It’s a real no brainer for me.”
Mr Moss was speaking just prior to Monica Bhatia, the head of the Organisation for Economic Co-Operation and Development’s (OECD) global forum on tax matters, delivering a warning that the Bahamas must “take quick action” or run the “big risk” of being ‘blacklisted’ in the near-term.
The Bahamas’ current approach to CRS implementation is to negotiate automatic tax information exchange agreements on an individual, or country-by-country basis.
However, this nation has become increasingly isolated after Hong Kong, Panama and the United Arab Emirates (UAE) all switched to the multilateral CRS implementation approach, which requires countries to negotiate automatic exchange with all-comers.
The Bahamas is now the only financial services jurisdiction of any consequence sticking with the bilateral approach, and Ms Bhatia yesterday said this nation was now perceived as a ‘hold out’ and “last tax haven standing” as a result.
Mr Moss said the Bahamas would suffer no competitive disadvantage if it agreed to the multilateral approach, since all rival jurisdictions had adopted it as the basis for CRS implementation.
“It makes no difference to the Bahamas,” he told Tribune Business. “We’ve got to go ahead and sign this so we’re not under the blacklist being threatened. That’s the overarching issue. We really want to avoid that, and we can do that by agreeing to their multilateral approach.”
Mr Moss argued that the latest impositions on the Bahamas and its financial services industry exposed how vulnerable the sector was when the likes of the OECD. EU and their member states changed ‘the rules of the game’.
He added that the Bahamas and other international financial centres (IFCs) had failed to learn from events dating back almost two decades, which was when the OECD started pushing its ‘harmful tax competition’ initiative and the Financial Action Task Force (FATF) blacklisted this nation in 2000.
“It shows you that the goal posts continue to move, that the Bahamas and these other financial services jurisdictions have not learned a lesson, even going on almost 20 years from the blacklisting,” Mr Moss told Tribune Business.
He added that the Bahamas and other IFCs should have joined forces years ago, forming a combined group and united front to help counter the OECD’s lobbying power and ‘divide and conquer’ tactics.
“I think the Bahamas can be a real leader in this,” Mr Moss said, “and really put the Bahamas on the financial services map. It gives us an opportunity to lead and get away from the ‘tax haven’,get that off our backs and charge corporate taxes.”
Calling for the Bahamas to shift away from a “reactive” approach to dealing with the OECD and other international regulatory initiatives, Mr Moss added: “We cannot respond as a single jurisdiction in the manner that we are responding now.
“It’s foolish. They don’t come to us individually. They come as the OECD. That’s how we need to respond. They will not stop. We can’t compete with them if they’re continually moving what the targets are.”