Bahamas ‘Not In Clear’ As Blacklist Escape Signalled


Branville McCartney


Tribune Business Editor


The Bahamas was yesterday warned “it is not in the clear” despite international media reports suggesting it has escaped the European Union (EU) tax “blacklist” due to be announced today.

Branville McCartney, the former Democratic National Alliance (DNA) leader, cautioned against any premature celebration over such an outcome - both because it has yet to be officially confirmed and the fact that avoiding it has resulted in “the ruining of our financial sector”.

A Cabinet minister under the last Ingraham administration, he added that even if The Bahamas was not listed “you can bet your bottom dollar” the EU and other multinational agencies will find different means to attack this nation again given that their ultimate goal is to drive it out of the financial services business.

Mr McCartney was speaking after multiple reports coming out of the EU’s Brussels headquarters yesterday suggested that The Bahamas will not be included on its “blacklist” of countries deemed “uncooperative” in the war against global tax evasion and avoidance.

A report from Politico quoted Pierre Moscovici, the EU’s commissioner for tax, economic and financial affairs, as identifying the ten countries that should be added to the 28-nation bloc’s “blacklist” today - and The Bahamas is not among them.

Seven of these nations are alleged to have failed to live up to commitments previously given to the EU to bring their laws and regulations into line with its demands. “These are Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica,” Moscovici told Politico.

The other three nations’ tax transparency regimes are deemed by EU officials to have worsened over the past months. Moscovici identified them as Barbados, the United Arab Emirates (UAE) and the Marshall Islands. Together, these ten nations will join the five already on the “blacklist” - American Samoa, Guam, Samoa, Trinidad and Tobago, and the US Virgin Islands.

There were signs, though, that the tax “blacklist”, which has to be approved and ratified by the EU’s finance ministers, was running into political headwinds with Italy pressing the case for the UAE not to be included.

This mirrors what happened with the earlier of two EU listings which The Bahamas faced, and was included on. The dealt with anti-money laundering/counter terror financing, and this country was included among 23 states deemed to pose a “high risk” of facilitating financial crime due to deficiencies in their regulatory regimes.

The Bahamas, which was seemingly included solely because it is being monitored by the Financial Action Task Force (FATF), the global anti-money laundering standard setter, subsequently received a “reprieve” after EU member states rejected the list as arbitrary and failing to follow proper procedure, thereby leaving the bloc exposed to potential legal action.

Today’s “blacklist”, which is separate and apart from that initiative, deals with tax transparency, and especially efforts to crack down on evasion and avoidance by multinational companies that deprive nations of much-needed tax revenues.

Politico’s report, which was backed by similar articles from Reuters, indicates that the Government’s work in collaboration with the Bahamian financial services in drafting - then passing - multiple pieces of legislation to overhaul this nation’s business and regulatory regime may have paid dividends. Final confirmation, though, will only come today.

K P Turnquest, deputy prime minister, described the reports as “interesting” but declined to comment further so as to not raise expectations unnecessarily. He reaffirmed, though, that the Government “believes” that The Bahamas has done everything necessary to comply with the EU’s demands and escape the “blacklist”.

“We need to wait,” Mr Turnquest told Tribune Business yesterday. “We’ve had expectations in the past, and I’d rather ensure we don’t find ourselves commenting on it and have to eat our words.”

Mr McCartney, echoing Mr Turnquest, said that while confirmation was needed it could only be “good” for The Bahamas to avoid a “blacklist” that appears to have snared a rival international financial centre (IFC) in Bermuda and multiple other Caribbean states.

The ex-DNA leader, though, argued that The Bahamas “should not have been on the edge” of being “blacklisted” to begin with given the efforts of successive administrations to ensure it complied with the “rules and regulations” demanded by the EU and others.

“We should not have been up for consideration, quite frankly, in terms of being placed on that ‘blacklist’,” he told Tribune Business. “All that has been happening is that The Bahamas has put in place the ruining of our financial sector.

“If we’re not on the ‘blacklist’ that’s good, that’s fine. But knowing these entities and what their goal is, they’ll come up with something in short order to list us again. Being off the ‘blacklist’ doesn’t put us in the clear.....

“It’s a measure, at the end of the day, to really wipe out our financial services industry. They’re doing a damn good job of it. The bottom line is I find it difficult to see persons looking to come to The Bahamas to invest and do business financially because they [the EU] don’t want them putting money in other jurisdictions and retain all the tax money there. It’s going to be very difficult for us to fight against.”

Even the International Monetary Fund (IMF), in a paper on corporate taxation, conceded that there were difficulties with the EU’s anti-tax evasion drive. It said: “It can be difficult for non-EU members to accept, for instance, an EU listing process that imposes EU and OECD standards on non-EU members that were not involved in setting them.”

Mr MrCartney said that while it was beneficial to escape “blacklists” because of the potential adverse consequences that flow from them, he did not take any comfort “because you can bet your bottom dollar they’ll come up with something shortly to have us teetering on the edge again”.

“They have an agenda,” he added. “We want to comply but, at the end of the day, know there’s going to be a roadblock and it’s going to come to a stop. Let’s not hold our breath.

“What they’ve required this country to go through trickles down to local businesses like myself, and really puts a complete strain on doing business and, in many instances, an onerous strain in connection with their compliance demands.

“It’s bordering on the ridiculous, quite frankly, what they’re asking for. I was in a meeting with managers at my office today to deal with all these [compliance] issues. It’s bordering on the ridiculous.”

The Bahamas last year passed multiple laws that fundamentally changed the regulatory landscape and operating model for the financial services industry. The Multinational Entities Financial Reporting Act led the way to deal with the Organisation for Economic Co-Operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) initiative that is also designed to combat tax evasion.

To satisfy the EU, The Bahamas then passed the Removal of Preferential Exemptions Act to eliminate the tax breaks enjoyed by foreign investors and non-resident entities that were not available to the domestic economy.

Prominent among these incentives was the 20-year Stamp Duty exemption for International Business Companies (IBCs), the premature end to which could spark investor lawsuits, and the flat $300 Business Licence fee.

The Bahamas also passed the Commercial Entities (Substance Requirements) Act to address the EU’s demand for all nations to impose “economic substance” regimes that effectively require companies to prove they have a physical presence - and are doing “real business” - in a jurisdiction.

It wants corporate profits, revenues and assets to be taxed in the jurisdictions where they are generated. They are thus aiming to prevent companies, especially multinational corporations, from exploiting gaps in tax types, rates and rules to artificially shift profits from jurisdictions where they are generated to low or ‘no tax’ jurisdictions, thus lowering their tax bill.

The Bahamian law requires entities operating in this nation to show they have a physical presence by conducting income-generating activities here. Management and control must also reside in this country.

Headquarters operations, together with banking, insurance, fund management, financing and leasing, shipping, distribution or service center operations, and holding companies, are the business activities under the Act that must have a “substantial presence” in The Bahamas through offices and employees and be conducting “real business” activities.

While some believe these changes are another step in the slow decline of Bahamian financial services, others see the challenge as presenting an opportunity to restructure the sector to generate increased business growth and job creation.


DDK 1 year, 6 months ago

Mr. McCartney is right. Looks like all the "mega" countries and institutions are trying to stamp out any semblance of competition all over the world. It is imperialism and colonialism all over again. No friends, no loyalties. Survival of the meanest and greediest.


Godson 1 year, 6 months ago

And if we don't fair well in the course of any imperialistic or colonial conquest, we (in particular, the Bahamian Establishment) only have ourselves to blame. We spend more of our energy and resources hacking, cutting and bringing each other down rather than focus on national intellectual and skills advancement.



tetelestai 1 year, 6 months ago

Godson, what has been our alternative? It has only been the FNM and PLP....unless you mean the DNA, or if you prefer, the CDR (most of whom served in government for the FNM or PLP), or the BDM (seriously???). Bahamians keep arguing that we vote the same old, but there have been no viable alternatives. And, of course, unless you are talking about the nonsense of Ian Strachan and Nicholette Bethel and spoiling your ballot, you have to vote someone in.


TheMadHatter 1 year, 6 months ago

The DNA should have gotten at least ONE seat in Grand Bahama this go around. The way that island been treated by both Parties since 1992 should make anyone there question their loyalty to the two main players and look for an alternative. The DNA offered an alternative. If FPO economy still sucking come 2022, I wonder if they will turn fool and put PLP back in? Probably. It's a stuck record.


Godson 1 year, 6 months ago

Telelestal, when Parliamentary representation was based and enshrined in the independence of each candidate, this Country advanced. In fact, party politics is advent of the PLP; the UBP was the 'Bay Street Boys' response to this new political notion. As you may know, the FNM was a merger of the NEW PLP and the UBP. Party politics took this Country off course; and ever since, it has plummet Our Country to moral, social and economic collapse.


licks2 1 year, 6 months ago

Or listening to ninnies like DDK. . .they talk foolishness day in and day out . . . closing their minds to good common sense logic and proper reasoning skills developments and keep on with their one-tracked stupidity in addressing complex issues. For example, the big boys are just jealous of us and are trying to "stamp out" lil competitions like us! Ha! We are competition for the big 20? Child please. . .for most of them we are nothing on the blip screen for them. . .except when we become a conduit for their citizens hiding their tax monies. . .or their enemies use us as a platform to "jook" them in their backs. . . otherwise. . .they don't give a damn what happen to us. . .the Bahamas don't worth much to any one of them big boys except tax or protections. . .they giving us plenty monies to help us sure-up those areas!! Ya think they giving us that because they find us a competition? Child please!!


TheMadHatter 1 year, 6 months ago

The EU needs taxes galore to pay for all the social services consumed by the Haitians that have come across through Libya and into Italy and Portugal and spread all around Europe (except Pohland and Hungary and Chek). Heck, one of them is even Mayor of London now. Ooops - did I say Haitians? I meant Muslims. Same effect really. Doesn't matter.

Basically a set of people who have nothing in their assets column except sperm, and think they can invade the modern world and get something out of nothing - without making any change or improvement to themselves. Walk around with towels on their head, obstructing MAJOR highways every single morning right in the middle of London for morning prayers and doing all kinda fool - and WE have to pay for it. Yes, WE Bahamians have to help pay for it because the EU tax man is looking for money to pay teachers and doctors and buy food etc for all of them (just like we do here for the Haitians).

Schools in England are now offering classes in "Handling the Effects of Stabbings". Seriously. Children being taught how to deal with stabbings - stopping blood flow, calling for help, which organs may be damaged, long term and short term effects, etc. Insanity is now being stamped as "Normal".

Where will they go next after the EU and the Bahamas are both turned into poor nations just like the ones they left? How will we survive when VAT goes to 15%? 22%? 35%? Look at what's happening in Europe. Check youtube. Truly crazy stuff.

This is DIRECTLY related to what this article discusses. TAXES. Taxes to pay for nonsense that should never have been needed.


imtmega 1 year, 6 months ago

Amen! What I want to know is why The Bahamas is even a member of the EU... we are not in Europe or even near it! Why do we care what the EU wants or says???


killemwitdakno 1 year, 6 months ago

....After a few months of trying even, senior officials are criticizing European and Russian efforts to help Iran cope with the revived American sanctions. Iran was able to persuade the EU (European Union) to assist Iran in getting around the sanctions the Americans restored because of Iran violating the 2015 treaty that lifted most of the sanctions. Iran offered EU nations lucrative economic opportunities in return for cooperation in getting around the American sanctions. The EU created the SPV (Special Purpose Vehicle) which is basically an EU approved barter system that makes it easy for Iran to sell trade with the EU via barter rather than use dollars. Iran uses a similar system with Russia and China. There were great hopes for the SPV but so far it has been a major disappointment to the many Iranians seeking to overthrow the religious dictatorship that has made life miserable for over four decades. Iranian leaders considered the SPV a major victory if only because it reduces cooperation between the United States and the EU.

SPV looked good on paper but in practice, it did not work.

Sounds like what they say they tackle.



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