The Deputy Prime Minister yesterday branded The Bahamas’ “blacklisting” by the Netherlands as a “premature response” that undermines the European Union’s (EU) own anti-tax evasion offensive.
Arguing that it went against the 28-nation bloc’s multilateral approach, K P Turnquest said: “We are obviously always concerned when we see this kind of unilateral action. We have been working very hard to meet the common standard that is promulgated by the European Union and the OECD.
“The instance of individual countries unilaterally deciding that they want to change the rules or apply a different standard is obviously a concern because it goes against the very tenet of a multilateral approach to the issues.”
Mr Turnquest added: “The European Union, of which the Netherlands is a member, has been very clear about the standard and we have worked hard to meet the standard. It is disappointing to get this kind of response - and a premature response, quite frankly - from the Netherlands when we do not have on record them having reached out to us on their concerns.”
The Netherlands recently published its own blacklist of no or low-tax jurisdictions as a part of its fight against tax avoidance. The Dutch government’s list shows 21 jurisdictions – 16 more than the European Union’s blacklist – which are deemed to have low-tax regimes.
The Netherlands’ listing 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.
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 previously 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 “blacklist” The Bahamas was especially troubling given this nation’s efforts to comply with the anti-tax evasion demands of the 28-nation EU, adding that the 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 EU members went beyond the bloc’s own standards like the Dutch.
Questioning whether it was a sign of EU “disunity”, Mr Turnquest 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.