The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Financial Services Board’s (BFSB) chief executive yesterday expressed hope that last week’s agreement with Japan had “created momentum” for this nation’s rapid compliance with new global tax standards.

Tanya McCartney, speaking after the Bahamas and Japan signed a protocol to upgrade their existing Tax Information Exchange Agreement (TIEA) to one where such details were exchanged automatically, said the private sector wanted more such agreements concluded “in the shortest possible time”.

Ms McCartney said the Japan agreement, a “first step” in complying with the Common Reporting Standard (CRS), the global benchmark for automatic tax information exchange, would also demonstrate to the OECD and its members that the Bahamas is living up to its commitments.

“It’s extremely important. It was a necessary first step,” the BFSB chief executive told Tribune Business of the TIEA upgrade with Japan.

“I anticipate that it will create some momentum, and we should see further agreements, particular where we have TIEAs already signed, being executed. Hopefully, that starts the momentum.”

Michael Halkitis, minister of state for finance, last year said the Bahamas had issued invitations for some 45 countries - including to most OECD, and all European Union (EU) members - to begin negotiations with it for automatic tax information exchange agreements.

Ms McCartney said the Organisation for Economic Co-Operation and Development (OECD), which has acted as the ‘point’ or lead agency for the G-20 nations on the CRS initiative, had not specified how many agreements nations needed to sign.

“The OECD has not set a threshold as to how many,” she told Tribune Business, “and we will want to get as many as possible concluded with OECD and EU countries, in particular.

“I hope it’s the start of momentum, and I hope we will have as many in place [automatic information exchange agreements] in the shortest time possible.”

The Bahamas had previously signed 33 TIEAs, which facilitate the exchange of tax information with other countries ‘upon request’. However, the OECD and its patrons subsequently decided to ‘move the goalposts’, and move the global standard to the automatic exchange of such information.

Apart from upgrading its existing TIEA network to automatic tax information exchange agreements, Ms McCartney yesterday said the Bahamas would also have to sign automatic tax information agreements with nations it had never previously negotiated with.

“We hope the Government move expeditiously in that regard,” she added of countries the Bahamas has no existing tax treaties with. “Those with TIEAs are top priority, and we should be able to get agreements in place quickly with those.”

The Bahamas passed the necessary legislation to give effect to the automatic exchange of tax information late last year, but is still working to finalise the accompanying regulations and other necessary measures.

Ms McCartney revealed that the financial services industry expected the regulations “to be finalised in the next week or two”.

“The team at the Office of the Attorney General, Ministry of Financial Services and Ministry of Finance are in constant contact with industry on these drafts,” she added.

“We’ve provided initial feedback, and those suggestions should be incorporated into the revised draft.”

Ms McCartney added that the ‘guidance notes’, which will inform the Bahamian financial services industry on how the mechanisms for automatic tax information exchange will work, will be completed once the regulations are finalised.

“There may have to be minor changes depending on what the final regulations look like,” the BFSB chief executive added.

Ms McCartney also acknowledged that for the upgraded protocol with Japan to take effect, the two countries needed to sign a Competent Authority Agreement (CAA), which sets out the terms and dates on which the information exchange will take place.

The Bahamas does not have to begin the automatic exchange of tax information until 2018, but Ms McCartney said its early ‘head start’ would demonstrate to the OECD that this nation was living up to its CRS commitments.

“I certainly think that by putting the framework in place to implement, and signing the first protocol, that we’ve demonstrated our commitment and lived up to what we said we’d do with actual implementation,” Ms McCartney told Tribune Business.

“Every step we take to demonstrate our commitment to international best practices and commitment to meet the highest international standards, we hope, will mitigate against any adverse listing.”

Ms McCartney was referring to recent international attacks mounted against the Bahamas, via the media, by the OECD and its surrogates over this nation’s decision to implement the CRS through bilateral negotiations with individual countries - as opposed to a multilateral basis with all-comers.

Apart from the OECD’s efforts to ‘bounce’ the Bahamas into going the bilateral route, a method it had approved itself, the EU has also threatened to place this nation and other international financial centres (IFCs) on a ‘blacklist’ by end-2017.

To counter this, Ms McCartney said she “cannot emphasise enough” the need for the private and public sectors to work together on CRS compliance.

“The hard work and collaboration between Government and the private sector to get the legal framework in place is bringing in results,” she added, pointing to the agreement with Japan.