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Dpm: ‘Serious Concerns’ Over Dutch Blacklist

Finance Minister K Peter Turnquest.

Finance Minister K Peter Turnquest.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas “will have some serious concerns” if its inclusion on a Dutch “blacklist” means European Union (EU) countries are going further than the bloc’s own anti-tax evasion offensive.

KP Turnquest, deputy prime minister, yesterday told Tribune Business that the Government had already mobilised its diplomatic contacts in a bid to discover the rationale for the Netherlands “unusual” action.

He added that its decision to include The Bahamas on a list of 21 “low-tax jurisdictions”, which were singled out on the basis that they have no or low corporate income tax rates below nine percent, was especially troubling given this nation’s efforts to comply with the anti-tax evasion demands of the 28-nation EU - of which the Netherlands is a prominent member.

Mr Turnquest said The Bahamas’ passage of legislation to remove preferential tax breaks for foreign investors, and require entities that are part of multinational corporate networks to have “substance” behind their presence here, would effectively be rendered meaningless and worthless if individual members went beyond the bloc’s own standards like the Dutch.

Questioning whether it was a sign of EU “disunity”, he said the Netherlands’ action could prove particularly problematic if it paved the way for other individual European nations to follow suit with their own national “blacklists” - something that would undermine the value, and will for The Bahamas and others, in meeting the wider bloc’s demands.

“We are looking at this at the moment using diplomatic channels as well as other contacts,” the Deputy Prime Minister told Tribune Business. “This is unusual, and we have to figure out what it means.

“It is an interesting position they have taken considering they are members of the EU. We believe we have complied, and are working towards full compliance, with all the EU initiatives.”

He added: “One has to ask: Is this a matter of taxation and concerns with jurisdictions such as ours, or is this a sign of EU disunity?’ In which case those of us subject to this blacklist will have some serious concerns.

“We can’t be subject to unified rules for tax policies which are then circumvented or extended on by individual members. The whole idea behind the EU common standard is just that: A common standard.

“If we’re going to be held individual standards, each individual country might as well go back to the bilateral approach we started out with before.”

Besides the five jurisdictions currently “blacklisted” by the EU, the Netherlands’ own list includes The Bahamas and 15 other states. Most are international financial centres (IFCs), such as Bermuda, the Cayman Islands, British Virgin Islands and Turks & Caicos, plus this likes of Jersey, Guernsey, Isle of Man, Saudi Arabia, Kuwait, Qatar and the United Arab Emirates.

Mr Turnquest, though, said The Bahamas’ would have to reassess its strategy and focus on complying with standards set by countries that were most important to it should the use of “national blacklists become more widespread.

He told Tribune Business: “If each member country starts off in its own direction, we will have to re-evaluate where we are and look at countries we have a strategic interest in to make sure we meet their standards as opposed to the standard currently.

“At the end of the day, we need to know on what basis they [the Netherlands] consider The Bahamas to be a harmful state, and whether they’ve been in contact with the Government of The Bahamas and what agency.

“I’m not aware of them expressing any concerns to my office. We will be addressing this matter from a diplomatic point of view, see what is discussed and then determine how to deal with it.”

So-called “national blacklists” are not a new invention, as they have been employed previously by other countries - Mexico being one - to target jurisdictions they believe are helping to facilitate tax evasion and avoidance by their citizens and companies.

The Netherlands’ listing, though, includes three punitive or sanctions-related measures it has implemented against The Bahamas and the other nations - some of which took effect from New Year’s Day.

Prominent among them is a 20.5 percent withholding tax that will be imposed on Dutch-source interest and royalties income, due to Bahamian and other corporate entities, from 2021 onwards.

“By drawing up its own stringent blacklist, the Netherlands is once again showing that it is serious in its fight against tax avoidance,” its state secretary for finance, Menno Snel, was quoted as saying. “And that’s just one of the steps we’re taking.”

While the Netherlands is unlikely to be a major market for the Bahamian financial services industry, its “blacklisting” tactic raises major questions as to the value and worth of meeting the EU’s demands if its members keep on shifting the standards.

It may also further shake already-fragile sector confidence as The Bahamas prepares to implement, and adjust to, the legislation passed by Parliament pre-Christmas to meet the EU’s demands.

Comments

birdiestrachan 2 weeks, 3 days ago

Turnquest and the others had all ready patted themselves on the back and said how great they were. They bended deep now this.

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Sickened 2 weeks, 3 days ago

It's all part of the game. The EU sets a rule and then get's one of their own to set a stricter rule to see if we bow to that as well. The bully's are waiting by the entrance and we run around the school yard jumping over walls and scooching under fences, looking for an exit.

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DDK 2 weeks, 3 days ago

Too bad we can't tell all of them to 'shove it', or can we?

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Well_mudda_take_sic 2 weeks, 2 days ago

This babbling buffoon of a Finance Minister spends more time worrying about the wants and needs of these foreign governments and foreign organizations that are hell bent on destroying our economy for the benefit of their own constituents than he does looking after the wants and needs of Bahamians and the Bahamas. Turnquest is yet again proving that he is one dumb bozo of the highest order! Meanwhile, the dimwitted Minnis hides behind his press secretary Ace because he literally does not understand what's going on. LMAO

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John 2 weeks, 2 days ago

The countries that fought the Bahamas the hardest about offshore banking now have the largest offshore banking portfolios. And that includes the US. They keep dangling a carrot but the carrot is rotten with corruption and scandal.corruption and

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proudloudandfnm 2 weeks, 2 days ago

Man who cares about the damned Dutch?!?!? You guys need to worry about BAHAMIANS!! We are suffering and you have DONE NOTHING to make our lives better!!! WORRY ABOUT BAHAMIANS!!!!

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ohdrap4 2 weeks, 2 days ago

wait till vanuatu blacklists the bahamas.

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bogart 2 weeks, 2 days ago

DOUBLE IRISH DUTCH SANDWICH........perfectly legal....

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Well_mudda_take_sic 2 weeks, 1 day ago

But don't order that sandwich with a side of Vanuatu stew fish or Panama plantain, or worse still, Bahamian conch fritters, because those add-ons would surely get the OECD, FATF and Netherlands' government all riled up. Personally I would recommend a bowl of Hong Kong shark fin soup to go with that sandwich. LMAO

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