The Tribune

THE Government has briefed the financial services industry on how the Bahamas plans to respond to Base Erosion and Profit Shifting (BEPS), and other international initiatives.

K P Turnquest, Deputy Prime Minister and minister of finance, pledged that the Government would deal proactively with global regulatory initiatives facing the sector, with the BEPS issue now taking priority.

The BEPS initiative, which is being driven by the Organisation for Economic Co-Operation and Development (OECD), aims to ensure that the profits of multinational companies are taxed in the country where they are generated.

A Bahamas Financial Services Board (BFSB) release, drawing on the OECD's own language, explained that multinational companies were using often-legitimate tax avoidance strategies to "exploit gaps and mismatches" between different countries' tax rules and "artificially shift profits" to low or 'no tax' jurisdictions. This enables them to minimise their tax exposure by paying a lower rate.

More than 100 countries are working together to implement '15 actions' to combat BEPS, which is viewed as depriving developing countries of much-needed tax revenue, while also undermining confidence and compliance with national tax systems.

The Bahamas has to indicate a definitive position on BEPS by December 2017, and particularly the minimum four standards (out of 15) that it will commit to implementing. The four standards that the Bahamas will likely select are (Action 5): Countering Harmful Tax Practices; (Action 6): Treaty Shopping; (Action 13) Transfer Pricing Documentation and Country-by-Country Reporting; and (Action 14) Dispute Resolution.

Brent Symonette, minister of financial services, trade, industry and Immigration, told the seminar that efforts were underway to improve Immigration process efficiency and implement the OECD's Common Reporting Standard (CRS) for automatic tax information exchange.

He added that arbitration, the 'Centre for Excellence', and enhancement of government agencies to facilitate the ease of doing business was also underway as the Government sought to reposition the financial services industry for growth.

Carl Bethel, the attorney general, gave an update on legislative items that will impact the industry, including the Proceeds of Crime Bill 2017 and the Financial Transactions Reporting Bill 2017. He said the changes are being made to address issues identified during the Bahamas' recent Caribbean Action Task Force (CFATF) Mutual Evaluation, which took place in 2016.

Tanya McCartney, the BFSB's chief executive and executive director, in response to the industry briefing, said: "Since the new administration came to office we have been in dialogue on the key priorities for the financial services sector.

"We have shared a strategic plan with the Government, which highlights the key levers that must be addressed as we seek to reposition this important pillar of our economy.

"We are pleased that ease of doing business and Immigration policy and process reform are being given focused attention.

"We also see the need for a review of the Bahamas' tax system with the objective of rationalising it, enabling the Bahamas to enter into bilateral investment agreements and tax treaties that are beneficial to the overall economy. Further, it is imperative that we get ahead of the regulatory initiatives that face our sector."