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Financial Industry Hails ‘Certainty’ On Tax Residency

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Tanya McCartney

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Financial services executives yesterday hailed the government’s plans to codify its tax residency initiative via legislation as providing “certainty and transparency” for both investors and global regulators.

Tanya McCartney, pictured, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business that the industry is awaiting implementation of an initiative designed to certify high net worth individuals’ compliance with their home country tax laws and genuine presence in this nation as their major domicile.

She added that the government’s plans to place the tax residency certificate initiative into statue law, as outlined by Elsworth Johnson, minister of financial services, trade and industry and immigration, would “give it a stronger footing” that encouraged investors as well as the likes of the European Union (EU) and Organisation for Economic Co-Operation and Development (OECD).

To qualify for a tax residency certificate, which gives successful applicants the right to reside in the Bahamas for up to three years, persons must stay in this nation for a minimum 90 days per year and not spend more than 183 days in any other country annually. A “substantial presence test” will be conducted if there are suspicions that persons are abusing this criteria.

Mr Johnson outlined the government’s plans in a World Finance article carrying his byline, which was published this week, and Ms McCartney said: “That’s a signalling of the direction we’ll be going in, which we would welcome.

“It’s a restatement of our commitment to actually introduce the tax residency certificate, and the minister has indicated to us that this residency programme would be codified into statute... He has indicated to us the intent to legislate to give it a stronger footing,

“We believe what is intended is competitive, and we look forward to receiving that legislation [when it is released for consultation]. The industry would be happy to see it in place and implemented. We’re happy he’s reiterated what the Government indicated is its position and we’re looking forward to seeing it implemented.”

The tax residency certificate initiative was developed under Mr Johnson’s ministerial predecessor, Brent Symonette, as a means for expatriate residents and investors to prove they are domiciled here and complying with both local tax laws and those of their home country.

Each certificate will have its own Taxpayer Identification Number (TIN) in a bid to address concerns expressed by the likes of the OECD, which claims The  Bahamas’ permanent residency product is in danger of being abused by tax evaders. It will confirm that the holder is a permanent resident of The Bahamas, and not liable to pay tax in their home countries.

Ms McCartney said yesterday that the BFSB’s Immigration working group had benchmarked The Bahamas’ tax residency certificate against rival jurisdictions, finding its terms to be both competitive and consistent with what is on offer elsewhere.

“Apart from competitiveness it is important for us to make very clear what tax residency means in The Bahamas. That is very important with regard to international regulators and initiatives,” she told Tribune Business.

“Where one’s taxed depends on their residency. It makes clear what the requirements are to all international bodies and defines what residency is for those investors wanting to set up tax residency in The Bahamas.

“Number one, it provides clarity and certainty, and number two, by defining what tax residency means and what would be included it brings transparency. It leads to transparency for both the client and international bodies; certainty and transparency.”

Ms McCartney said the tax residency certificate initiative will also encourage high net worth clients and their families to follow their assets to The Bahamas by domiciling here, and support the recent growth in family offices and more personalised services.

“With the growth in the number of family offices we see here in The Bahamas, we believe our location is an allure to make people choose The Bahamas as a place to reside,” she added. “Without a doubt we are seeing that.

“That is driven by proximity to the US, the political and economic stability that most countries can’t boast of, and quality of life. We have more developments that allow for business as well as residency, and that is certainly something persons from Latin America have found quite attractive.”

Mr Johnson, in the World Finance article, wrote: “Having recognised the importance of adopting a modern, progressive and development-focused Immigration framework, the Ministry of Financial Services has developed a tax residency programme that can serve as a gateway to more permanent residence for high-net-worth individuals.

“This programme grants successful applicants the right to reside in The Bahamas for a period of up to three years and bestows upon them a certificate of tax residence. To maintain access to these benefits, however, investors must make The Bahamas their home (or main) residence, living in the country for at least 90 days and declaring they will spend less than 183 days in any other single country. If they fail to abide by these rules, a ‘substantial presence test’ will be conducted to ascertain whether their benefits should be withdrawn.”

He added: “The ministry also recognises that the issue of residency is hugely important given global developments in tax transparency. With this in mind, the concept of residency – and, specifically, tax residency – in The Bahamas has been carefully defined. This has helped the country’s financial services sector remain progressive, while also keeping up to date with a changing global landscape.

“As always, a fine balancing act must be struck. The Bahamas will continue to abide by the highest regulatory standards – both domestic and international – while delivering new products and services that maintain the archipelago as one of the world’s most respected providers of financial services.”

Comments

Porcupine 9 months, 2 weeks ago

Perhaps all countries should agree to a fair tax rate for their ciitizens so that this nonsense is abolished once and for all. Let the rich, High Net Worth Individuals as they are called, pay their taxes just like everyone else. No, they should really pay a little more, in the spirit of progressive taxation. I do not blame The Bahamas for starting this trend, but it is certainly not a Christian move, is it? The burden of the poor as regards to taxation is directly linked to the schemes developed by the rich and their respective countries to avoid paying their fair share of taxes. Presently, many of the largest corporations in the world, and most of the richest individuals pay no taxes at all. That The Bahamas has for years encouraged this behaviour is simply not right. The tax code for The Bahamas is absolutely decimating to the middle and poor classes here. We see it daily. Beyond the inefficiency, corruption, theft and mismanagement, what is killing our people in this country is our totally unfair tax regime. That we have remained entrenched in this backward thinking, is the real crime, when there is no doubt that attracting high net worth individuals helps only a handful in this country, while inflating prices of real estate and skewing the job market. I grew up hearing that behind every great fortune is a great crime. There seems some truth to this adage, if only viewed through the lens of Bahamian experience alone. I have no doubt that there are good people working in the "financiall service industry", yet I must believe that this whole industry does very little for our country's people as a whole. Yes, I have heard the arguments before. They all fall flat on their face when it comes to fairness, and true economic benefits. Basically, we continue to give away our sun, sand, and sea, and stable society to those who have more money than others. And, we give these amenities away for free to those people, just because they have money. And, it is definitely at the expense of the rest of our citizens. This so-called financial services industry is merely a scam. It is a terrible signal to the citizens of The Bahamas that we are willing to un-level the playing field for the benefit of those already rich, at the expense of those who were born here and have had no such opportunities.

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Porcupine 9 months, 2 weeks ago

And, to further bolster the idea proposed that behind every great fortune is a great crime, consider this. What would the The Bahamas look like today if the money from say, rum running and illegal numbers houses were confiscated and those involved in the crime jailed. Think about this for a moment. Think about how that illegal money is being used today in this country and about how those High Net Worth Individuals and their descendants influence and shape our society and laws and economy. I am not picking on anyone in particular, but anyone who thinks The Bahamas is any better than any other corrupt country, including to the north, should be honest with themselves. Our entire tax structure, based on placing the majority of taxation on the poorest in this society is one of the most depressing aspects of a country that proclaims to be Christian. It takes a great deal of dishonesty, or a horrible education to think this is just OK. In the spirit of true Christian morals, it is safe to say we have no Christian leaders who have the brains or moral stature to speak the truth. And further, it appears that our entire leadership class has joined forces with the rich and continues to do their bidding at the risk of grinding their most vulnerable citizens into the slums they are helping to create. The working class of this country is being saddled with an unbearable burden and so few seem to acknowledge this fact. Not our pastors, not our businesspeople, nor our so-called leaders.

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