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Bahamas Moves To Stop ‘Devastating’ Blacklisting

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government yesterday moved to prevent the “devastating” consequences of a financial services ‘blacklisting’ by confirming its readiness to alter the Bahamas’ automatic tax information exchange approach.

A Ministry of Finance statement, issued yesterday evening, said the Minnis administration had “formally indicated its interest” to the Organisation for Economic Co-Operation and Development (OECD) in implementing the Common Reporting Standard (CRS) by acceding to the Multi-Lateral Convention for Mutual Assistance in Tax Matters.

K P Turnquest, the Minister of Finance, told Tribune Business that the multilateral policy switch “allows us to mitigate the threat” that the Bahamas would be deemed non-cooperative on tax information exchange, and subsequently named on a ‘blacklist’.

“Front and centre in our considerations was the need to mitigate any ‘blacklist’,” he said. “That would be devastating to our financial services industry. We’re prepared to do whatever’s required to demonstrate to our peers that we’re a well-regulated and compliant jurisdiction.”

The Government’s move was described by a well-known QC as “a prudent and appropriate step” to safeguard the Bahamas and its financial services industry, the so-called ‘second pillar’ of the Bahamian economy, from any ‘blacklisting’ by the likes of the OECD and European Union (EU).

With the EU threatening to produce such a list of countries it deems non-cooperative in fighting tax evasion by year-end, Brian Moree said the changed approach to CRS implementation had been anticipated by many in the financial services industry for some time.

The McKinney, Bancroft & Hughes senior partner told Tribune Business: “It is apparent from the statement issued today that the Government has indicated that the Bahamas is preparing to switch from a bilateral approach to a multilateral approach for the purpose of implementing the CRS.

“This position was anticipated by many stakeholders in the industry, and would appear to demonstrate the Government’s commitment to avoiding any risk of blacklisting for the Bahamas. The decision is in line with other jurisdictions which had initially adopted the bilateral approach, and to that extent it is not entirely surprising.”

Financial services sources, speaking on condition of anonymity, were more blunt in their analysis, telling Tribune Business that “the handwriting has been on the wall for some time” with regard to the Bahamas’ changed CRS approach.

A ‘blacklisting’ would have devastating reputational consequences for the Bahamas and its financial services industry, impeding its access to global financial services markets and raising business costs associated with greater due diligence and scrutiny.

With Hong Kong, Panama and the United Arab Emirates all choosing to migrate from the bilateral to the multilateral approach, the Bahamas has been left isolated and exposed as the only international financial centre (IFC) of significance still adopting the former route to implementation of the CRS, the global standard for automatic tax information exchange.

As the ‘last man standing’, the OECD and its members last year targeted the Bahamas via an international media onslaught in a bid to force this nation to alter its CRS approach, with the bullying tactics ultimately proving successful.

“In my view, it is a prudent and appropriate step to protect the financial services industry in the Bahamas,” Mr Moree added of the Government’s action yesterday. “Presumably it will be favourably received by the OECD. Hopefully they will now bring an end to the aggressive tactics and the pugnacious approach they have recently taken with regard to the Bahamas, and this will result in a more collaborative and co-operative approach going forward.”

The QC also acknowledged that the Government’s decision was effectively made for it, adding: “This appears to be a pragmatic decision given the realities of the options facing the Bahamas.

“It is important that the matter be resolved, and we quickly move to full implementation in order to meet the deadlines for reporting in 2018.”

The Bahamas has until September 2018 to meet its CRS commitments, and most in the financial services industry had prioritised avoiding any blacklisting as opposed to what was the better automatic tax information exchange implementation method.

The Bahamas previously agreed to implement the CRS via a bilateral approach that involved negotiating agreements on an individual country-by country basis.

However, the OECD and its developed country members have been steadily increasing the pressure on the Bahamas to switch to the ‘multilateral’ approach, requiring this country to negotiate tax deals with all-comers at once.

Given that it had previously approved the ‘bilateral’ route as an option for CRS implementation, the OECD knows it is open to charges of ‘hypocrisy’ and ‘goal-post moving’ if it simply demands the Bahamas goes multilateral.

Instead, its officials are arguing that the Bahamas has left it too late to use the bilateral approach to meet its automatic tax information exchange commitments by the September 2018 deadline.

OECD representatives have employed the analogy of a high-rise building to describe the Bahamas’ situation, saying that all other countries were taking the elevator to the top via the multilateral approach, and this country was the only one using the stairs.

Monica Bhatia, who leads the OECD’s Global Forum secretariat, said the Bahamas was perceived as “the last tax haven standing” and an “outlier” because it was the sole financial centre of any significance to persist with the bilateral approach to CRS implementation.

Mr Turnquest confirmed that the OECD’s position was that the Bahamas “doesn’t have enough time to meet our commitments” under the bilateral approach.

“We felt it would be in our best interests, being the last country to be attracted to the bilateral route, to join the rest of the countries signing up to join the multilateral way,” he told Tribune Business.

The Ministry of Finance is the competent authority that will handle the automatic exchange of tax information, and Mr Turnquest said the Government had merely asked the OECD “to be invited to join” the multilateral convention.

“There are still mechanisms in place to do the bilateral, and there may be some reservations we may take with respect to the final agreement,” Mr Turnquest said.

The Ministry of Finance added of yesterday’s announcement: “This important development serves to emphasise, once again, the enduring commitment of the Government of the Bahamas and the banking sector to adhering to all international best practices, thereby assuring the continued participation of the Bahamas as a world-class financial services centre.”

Comments

Well_mudda_take_sic 6 months, 2 weeks ago

The next round of blacklisting is going to be centred around the OECD's latest project (yet to be announced) which will be aimed at getting much greater access to beneficial owner information relating to financial accounts/facilities operated by law firms for their clients. Apparently many law firms around the world will no longer be able to assert attorney-client privilege as means of avoiding the release of information about their tax cheating clients.

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concerned799 6 months, 2 weeks ago

What guarantee is there there won't be new demands to avoid a future blacklisting once these demands are met? Is this not the fundamental illogic of agreeing to extortion?

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sheeprunner12 6 months, 2 weeks ago

For the FNM government to prevent further downgrades ........ it must repeal the webshop legislation and close the money laundering loopholes available to the numbers house bosses

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OMG 6 months, 2 weeks ago

So true. Why make flowers rich when a national lottery could benefit the whole country.

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killemwitdakno 6 months, 2 weeks ago

America's loose lips sinks ships. Good job giving them ammo.

Pitiful turn around.

You know they're just going to have more demands soon and you'll immediately lose clients. Of the Shades of grey painted before, you got even more business.

On top of that, EU still owes the region reparations.

Should have started of sharing with Britain.

Did FATCA help ? No. Bottom line. Don't listen to old guards who only know how to jump for white man and are clueless to the politics.

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killemwitdakno 6 months, 2 weeks ago

What a dumbass. Each secret at the right time could have earned you how much?

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killemwitdakno 6 months, 2 weeks ago

Tell me what banks they already forced out are coming back?

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killemwitdakno 6 months, 2 weeks ago

Are they Paying for the treasure trove??

The value of that could make us debt free.

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killemwitdakno 6 months, 2 weeks ago

Go right ahead switch and then SUE them.

Watch. It will be no different from Colorado selling marijuana whilst the NY black is still incacerated.

They just want the industry and they're scared.

Other entities will still frame and label you scum once they get it.

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killemwitdakno 6 months, 2 weeks ago

First reservation. Accounts of asylum seekers anywhere.

2nd. Clients from countries with dictators or expecting war.

3rd. Registered party voters.

But still, make OECD PAY for our membership!

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killemwitdakno 6 months, 2 weeks ago

"Asked to be invited" what an imbecile.

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killemwitdakno 6 months, 2 weeks ago

As long as they're hunting the globe for a dump on Trump, they'll never stop the threats.

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killemwitdakno 6 months, 2 weeks ago

I hope to God yore not listening to Fred Smith who'd give this place to Haitians and sue government for it.

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killemwitdakno 6 months, 2 weeks ago

"the handwriting has been on the wall for some time” with regard to the Bahamas’ changed CRS approach. Explain.

"via an international media onslaught in a bid to force this nation to alter its CRS approach" Bahamas Leaks. And we think this type of aggression will ease up? If they want it that way, give it to em that way where they can't make geopolitical moves on info.

How much is this going to cost our treasury?

Just like Ingrahm who gone run sign everything.

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killemwitdakno 6 months, 2 weeks ago

Bye bye everyone who lives here to be next to their money.

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killemwitdakno 6 months, 2 weeks ago

Did you ever get paid when prbibution was ended? Imagine how well of we would have been.

This is worse than finding oil, selling it all, and getting neither pay nor fuel.

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killemwitdakno 6 months, 2 weeks ago

Then he'll be the same one to turn around and say we need VAT becaus this crew of fukers say so.

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killemwitdakno 6 months, 2 weeks ago

So Joe every individual on the planet is going to need a tax identification number? This the devil.

http://www.iol.co.za/business-report/companies/new-reporting-will-be-costly-and-time-consuming-9409631

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killemwitdakno 6 months, 2 weeks ago

India and Korea will be the first countries to commence reporting in 2017. The irony of recent politics in those two countries.

LThe AEOI requirement will see bank account information reported by the banks to the domestic tax authorities, who will then exchange the data with tax authorities in partner countries.

http://www.straitstimes.com/business/banking/1-in-5-banks-in-region-say-tax-evasion-will-more-than-double-this-year-despite-new

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killemwitdakno 6 months, 2 weeks ago

On May 5, the OECD added a human-driven whistle-blower facility on its on its Automatic Information Exchange portal.

The Whistle-Blower Facility:

The OECD says the portal allows interested parties to report potential schemes to circumvent the CRS.

This facility is part of a three step process the OECD has put in place to deal with schemes that purport to avoid reporting under the CRS. The steps in the process are: (1) identify reporting loopholes, (2) analyze them, (3) decide on action. Action may mean adapting CRS procedures or cracking down on secretive countries by quizzing them in so called “peer reviews” of how they implement CRS procedures.

http://jpost.com/app/article/490946

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killemwitdakno 6 months, 2 weeks ago

financial institutions need time to train their staff on properly informing clients of the requirements.

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killemwitdakno 6 months, 2 weeks ago

$32trillion gone and all this time we were and will still be struggling along.

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killemwitdakno 6 months, 2 weeks ago

Canada wants to tighten up rules which allow companies to make things in a low-tax company and then sell them at inflated prices to an affiliate in a high-tax country, which shifts profits to the low-tax country.

Sure didn't get profits before, what does Turnquest think about now?

Morneau said he needs co-ordinated action with the provinces to find out who owns corporations, because only 10 per cent of companies are federally incorporated.

Well who's fault is that?! How about stop taking all the campaign lobby money.

(Not like we haven't welcomed them to take Nytard back)

The Bank of Canada said Wednesday that recent government policy has yet to cool hot housing markets. Indeed, the elevator that Morneau rode on Thursday to the fourth floor of First Canadian Place featured an ad for a discussion panel, “When unscrupulous deals drive a too-hot housing market.” But Morneau on Thursday downplayed concerns about a housing bubble.

O God another housing bubble. Yeh who's to blame for that? Not private finacing.

http://www.financialpost.com/m/wp/personal-finance/taxes/blog.html?b=business.financialpost.com/personal-finance/taxes/no-good-reason-for-that-finance-minister-bill-morneau-outlines-plans-to-catch-tax-avoiders

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killemwitdakno 6 months, 2 weeks ago

Delaware and Nevada are openly doing the contrary and attracting at any cost business from other jurisdictions. Many clients from various financial centres have thus migrated to the USA.

In this opinion paper, lawyer Marc Hein, partner at Jurisconsult, warns that new OECD rules on Base Erosion and Profit Shifting could cripple the Mauritian financial services industry.

http://www.mondaq.com/x/597344/Financial+Services/Tax+Advisers+Wary+Of+New+OECD+Rules

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killemwitdakno 6 months, 2 weeks ago

South African trusts are taxed at 41%.

Weak case made for inequality in this article. http://www.iol.co.za/personal-finance/wealth-under-the-spotlight-9299652

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killemwitdakno 6 months, 2 weeks ago

Wait wait wait... We give a f what JUNKER makes list of ?? 😆😆😆😆😆😆😆

EU commish, former Luxembourg President, Luxembourg who took forever to join this shenanigan and wasn't compliant in most areas. Junker who's hoping to keep the multinational corporation controlled EU , just another arm of this attempted offshore turf war, together.

I

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killemwitdakno 6 months, 2 weeks ago

Uh huh

https://www.theguardian.com/business/2017/jan/01/jean-claude-juncker-blocked-eu-curbs-on-tax-avoidance-cables-show

the Grand Duchy had helped multinationals to avoid paying tax on profits through secret deals brokered by audit firm PricewaterhouseCoopers (PwC).

See , this is exactly what I'm talking about. They'll frame us but facilitate it with their favors for these big corporations.

Truth is, they don't want the people to know when it's them in authority who cut gravy deals meanwhile overburdening the individual and poor man.

https://euobserver.com/political/136435

https://euobserver.com/economic/136175

O but they want to jail Assange. https://en.m.wikipedia.org/wiki/Luxembourg_Leaks

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banker 6 months, 2 weeks ago

You haven't been partying with Tiger Woods, have you?

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killemwitdakno 6 months, 2 weeks ago

Negotiating is how we survive.

Other places got paid lifetimes over. Isreal practically got the biggest arms deal in history for passing FATCA in their Supreme Court the same day.

What are we getting ?

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killemwitdakno 6 months, 2 weeks ago

On top of that, there's thing we and others have been trying to getbautomatic information on like travelers leaving other countries with guns, persons Intel was monitoring as potential terrorists, outbreaks, info to improve trade , etc.

Not having this isvas inconvenient as requiring the weather channel to have a license to get out radar reports during a hurricane.

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proudloudandfnm 6 months, 2 weeks ago

We are broke. Our country is in a PLP created recession.

I wonder how these treaties affect our ability to make progress? Is it worth it for us to worry about things like the WTO or OECD? Or should we just ignore them and do our own thing?

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DDK 6 months, 2 weeks ago

Wish we could but we are such little fry, they will bully us until we give in. It is their way, they are piranhas.

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killemwitdakno 6 months, 2 weeks ago

Meanwhile the US can just pull out of the Paris Agreement today whilst places like here will flood into extinction. Hello, we have mass migration to afford.

Get PAID.

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DDK 6 months, 2 weeks ago

Who do you think is behind all these global financial institutions?

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killemwitdakno 6 months, 2 weeks ago

Didn't even get a chance to tax these corporations and accounts ourself. Other places still owe Caribbean banks $2trillion.

Pay that first.

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killemwitdakno 6 months, 2 weeks ago

Nothing explains what companies possibly being in the cross sectional of the Hawksbill Creek Agreement and this bank reporting will result in.

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killemwitdakno 6 months, 2 weeks ago

Which state seizes the assets when more clients hang themselves like last week fearing looming revelations or losing everything?

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killemwitdakno 6 months, 2 weeks ago

If the women's referendum passed, all you had to do was pair them with wives to make moves overnight, but no, your dumbass campaign ploy was to side with the misogynist pastors.

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killemwitdakno 6 months, 2 weeks ago

Global markets at based on gold's value, gold comes from Africa, Africa is poor.

Turnquest is repeating this.

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killemwitdakno 6 months, 2 weeks ago

Allow similar jurisdictions to integrate in a phase before us. Stay step behind places like Dubai to analyze their issues first.

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killemwitdakno 6 months, 2 weeks ago

Although this is settled, never entertain investment citizenships unless they're bringing a full industry, major infrastructure like island wide wifi, a high net worth bank , paying a percentage of the debt, are leading global brands without conflict and good environmental and labor record, starting a Bahamian manufacturing plant in Haiti or Cuba, $400m/yr (don't consider jobs alone) migration swarms destabilize. Don't request them to own land.

This going to suck.

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