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Our Foot’S On Your Neck, Eu Warns

Attorney General Carl Bethel.

Attorney General Carl Bethel.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Attorney General last night said senior European officials and politicians have warned The Bahamas: "We won't take our foot off your neck until you implement a corporate income tax."

Carl Bethel QC revealed that a "senior" member of the European parliament had delivered this extraordinarily blunt message to The Bahamas' ambassador to the European Union (EU), Maria O'Brien, as this nation's inclusion on the bloc's anti-financial crime blacklist was confirmed yesterday.

He added that Ms O'Brien was also informed by the official heading the European Commission body that oversees the initiative there was "nothing The Bahamas can say or do" to alter the decision, which he branded "a breach" of the Commission's commitment to engage impacted countries before listing them.

Describing the European Commission's action as "a hostile act by one of the world's largest economic blocs" towards The Bahamas, Mr Bethel accused it of using the initiative by the Financial Action Task Force (FATF) - the global standard-setter in the fight against money laundering and terrorism financing - to mask its true intention towards this nation and other Caribbean states.

While the Commission, which acts as the EU's civil service, says its own blacklist is based on those countries subject to enhanced FATF surveillance as a result of weaknesses in their anti-financial crime regimes, Mr Bethel said this did not explain why Trinidad & Tobago - which exited the latter's process in February 2020 - was still being targeted by the Europeans.

He suggested the European Commission was maintaining Trinidad's blacklisting as a means to pressure it to develop a register showing the beneficial ownership of all corporate vehicles in that jurisdiction, and argued that this - together with the comments made to Ms O'Brien - indicate demands will be made of The Bahamas that go far beyond those of the FATF process.

The European Commission, explaining its rationale for placing The Bahamas on its "high risk" listing, yesterday said in its official statement that the COVID-19 enforced delay to the FATF's "site visit" to this nation meant it "cannot confirm" whether the country has resolved the deficiencies in its anti-financial crime regime.

The FATF had earlier this year placed The Bahamas in the "exit process" from its oversight initiative, with Mr Bethel and the Government hoping that its on-ground assessment could have been conducted by May in time to remove this country at its June plenary. But COVID-19 has put paid to both that meeting and the "site visit" for now, meaning The Bahamas will have to wait longer to escape FATF surveillance.

"The Bahamas has taken steps towards improving its anti-money laundering/counter terror financing regime and, in February 2020, the FATF made the initial determination that The Bahamas has substantially completed its action plan and warrants an on-site assessment to verify that the implementation of The Bahamas’ reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future," the European Commission said.

"The FATF has yet to carry out such assessment to confirm its initial determination. Therefore, the Commission does not have in its possession information which would enable it to confirm at this stage that the strategic deficiencies have been effectively addressed."

Mr Bethel, though, argued that the European Commission was using the FATF's initiative as a "precursor" to cloak its true motives and objectives towards The Bahamas and other targeted nations. And he accused the Commission of hypocrisy given that its representatives on the FATF had also voted in favour of The Bahamas' site visit earlier this year.

"They must have been satisfied that we had made sufficient progress to warrant an on-site visit," the attorney general said. "It's the European Commission that's represented at the FATF, not any other EU body or directorate.

"To now put us in the same category as Yemen or Myanmar, and countries of that ilk, which are only just entering the FATF process and have not made the changes The Bahamas has made, is disproportionate and unacceptable; totally unacceptable."

Pointing to Trinidad's continued presence on the European Commission list, despite its removal from FATF scrutiny, Mr Bethel added: "They're [the Commission] following their own agenda. The FATF is a precursor to their own agenda.

"As indicated by the treatment of Trinidad, the FATF is just a horse they're riding on. They're going to use this blacklist to obtain more from jurisdictions. This is unilateralism in the extreme and simply unfair. They want to force Trinidad to do something they want them to do."

He accused the European Commission of breaching its own criteria for determining how countries would be selected for inclusion on its blacklist, especially the pledge that affected nations would be given advance warning and given an opportunity to present their case.

Following Tuesday's Reuters report about The Bahamas' impending inclusion, Mr Bethel said the Ministry of Foreign Affairs only received formal notification from the European Commission's Jamaica-based representative the following day.

The Bahamas move swiftly to activate all diplomatic channels, but Mr Bethel said Ms O'Brien received a cool response from the Irish official heading the European Commission directorate overseeing the blacklist. "She was told that the determination had been made to blacklist The Bahamas. Period," he added. "He said the decision was made and there was nothing we could say or do. They are in breach of their own stated methodology."

Mr Bethel said the European Commission's last-minute notification highlighted both the lack of due process afforded The Bahamas and its "determination to hit The Bahamas willy-nilly". He agreed that "it is not a given" that The Bahamas will escape its blacklist even if its exit from the FATF process is confirmed.

"A lot of what goes on in the European Commission is motivated by civil society in Europe and pressure from members of the European Parliament," Mr Bethel told Tribune Business. "One of them had an exchange with our ambassador, and it was reported to me somewhat casually, which shows the depth of their animus to The Bahamas or some people's animus towards The Bahamas.

"The ambassador was told that Europe has put their foot on the neck of The Bahamas, and unless we have a corporate income tax, their foot will not come off the neck of The Bahamas. That was said by a senior member of the European parliament. The foot of Europe has been put on the neck of The Bahamas, and will not be removed until The Bahamas implements a corporate income tax."

Such a demand threatens to cause further economic dislocation at a time when the Bahamian economy is already reeling from COVID-19. It signals further unrelenting pressure, and a tightening of the screws, on the Bahamian financial services industry that has been suffering slow but steady attrition for the past two decades due to the onslaught of global regulatory initiatives from various international bodies - including the EU.

The push for a Bahamian corporate income tax reflects similar demand from individual EU states such as the Netherlands, which last year demanded that The Bahamas implement a corporate income tax at 9 percent or higher as the price to escape its national tax non-cooperation “blacklist”.

While some in the Bahamian financial services industry have argued that a low-rate corporate income tax may be the way to go, as it would remove the so-called 'tax haven' stigma and enable this country to enter into double taxation agreements, Europe's position effectively represents interference in a country's ability to determine its own tax structure and methods.

While there was no question about the fairness and integrity of the FATF process, Mr Bethel said The Bahamas "can rest assured" that even if it is removed from that organisation's process there will be "additional demands from elements in Europe".

He added: "It's a naked exercise of unilateralism by a global power and we have to survive it as best we can, seek to address their concerns as best we can, and hope reason will prevail at the end of the day. You cannot have meaningful dialogue based on one power's imposition of their will. It doesn't work that way. We hope in time that calm and reason will prevail."

Contrasting the European Commission's current approach with the "mutual respect" if afforded The Bahamas on recent tax-related matters, Mr Bethel told Tribune Business: "That is absent in this process right now which is unfortunate, because in all previous discussions with them the one thing we had was a reasonable and respectful relationship that underpinned everything.

"This blacklisting is so arbitrary and so aggressive, and it defies that previously existing relationship. It's very harmful. It's a hostile act by one of the largest economic blocs in the world against tiny little countries, including The Bahamas. It simply beggars belief that this could be happening to The Bahamas and other Caribbean countries. It's not the relationship we had come to expect from the EU, with decades of co-operation between our countries and the EU."

Mr Bethel added that The Bahamas is "not adverse to complying with established rules that apply even other countries globally".

Comments

Chucky 5 months, 3 weeks ago

Pure lies!

Minnis them , need to implement corporate income tax, they see it as the only way out of our financial mess.

You know how these deals go, Minnis them probably asked the eu to make a public demand that we get corporate tax, that way it don’t look so bad on Minnis

Well the stealing, corruption and spending like a drunken sailor since independence is finally gonna ruin the one thing we had going and that was low taxes.

I guess on the plus side, Minnis them, and whoever is next will soon have a new revenue stream to suck off of.

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Baha10 5 months, 3 weeks ago

Given that it would appear the Appeasement Legislation of the past 20 years has had no effect on avoiding Black Listing and merely only served to erode whatever competitive advantage we might have had as regards other Jurisdictions, it would seem the most prudent course would be to simply “re-set” our position by repealing all Appeasement Legislation and start acting in the best interests of The Bahamas, as indeed the EU is doing as regards themselves.

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tetelestai 5 months, 2 weeks ago

Agreed, Bana10. Hubert Ingraham, who was severely ill informed and laughably out of his depth as PM, in 2000, got awfully bad advice from 'bumbling' Bill Allen and the greedy Higgs & Johnson law firm to change our legislation. It was absolutely the wrong move at the time - and a transgression that we are still paying for over 20 years later.

In all of the Bahamians yapping about numbers boys, Shane Gibson, corruption, Brent Symonette, corruption, blah, blah, blah, we have missed this awful situation, caused by H&J and Hubbigity, which, in my view, is the most significant event that has happened to the Bahamas post-Pindling. It is no hyperbole to suggest that what we did in 2000 caused us to move toward Mauritius and Jamaica (in terms of financial services) instead of moving toward Singapore, Estonia and Malta (who, btw when faced with blacklisting in 2000, told the OECD to 'go to hell'). This is and will continue to be a travesty for us. The damage is done, we are and will remain a 3rd world, banana republic country - again, unlike Malta, etc. who are 2nd world heading for 1st world status.

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longgone 5 months, 2 weeks ago

Hey Tetel--You seem to have a gripe against Higgs & Johnson---Did they do you wrong sometime??

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tetelestai 5 months, 2 weeks ago

They did the country wrong, sir, as I thought I tried to explain, perhaps not very well.

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JokeyJack 5 months, 2 weeks ago

Why would you assume that? He simply pointed out which Law Firm was involved with the decision. If it had been Bryson & Packard then he would have said Bryson & Packard. I see no foundation to your question.

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Entrepreneur 5 months, 2 weeks ago

It is time to sue the EU. The members of the commission in particular, as revealed by that odious comment, are nothing but bullies and weaklings.

The UK saw the light. So should we.

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Well_mudda_take_sic 5 months, 2 weeks ago

So now they are saying they destroyed our financial services sector in order to force us to introduce income tax?! I don't think so.

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Well_mudda_take_sic 5 months, 2 weeks ago

P.S.: And whatever income tax that we might introduce would never be high enough to satisfy these privileged global bureacratic louts. Accordingly, we would find ourselves continuing to be blacklisted, yet again and again with no end to it.

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Well_mudda_take_sic 5 months, 2 weeks ago

So now they are saying they were justified in destroying our financial services sector in order to force us to introduce income tax?! I don't think so.

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professionalbahamian 5 months, 2 weeks ago

Yes please tell the EU when they start treating the Bahamas fairly then it may start jumping through hoops again. There is the soon to be independent UK, and others to engage with- perhaps the EU is acting out of their own anticipated desperation or soon to be disintegration - obviously not from what they know to be the case.

Any measure to comply now will only set them at ease for the shortest possible period. I’d recommend telling them it has been a pleasure and have a good day! One may see a huge influx of investment once things are relaxed... The Bahamas needs to look out for itself in this environment.

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Godson 5 months, 2 weeks ago

Damn... someone has sense heh!

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joeblow 5 months, 2 weeks ago

… yep, when someone has their foot on your neck its easier to grab them by the b**ls! We simply need to ignore them and recreate a tax schedule that would draw business from European centers here! Screw them!

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stocktonfuller 5 months, 2 weeks ago

Professionalbahamian is quite correct ... acceptance can only lead to more demands. Perhaps a an extortion suit against the EU and a return to normal in the Bahamas would do wonders for the economy

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Entrepreneur 5 months, 2 weeks ago

The EU is now so untrusted in UK, it is laughable.

These comments against the wonderful Bahamian people are utterly dishonourable.

The EU Emperor has no clothes. Let us hope Italy leaves next.

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DEDDIE 5 months, 2 weeks ago

We have been jumping through hoops for the last twenty years. It obvious that their sole interest is recolonization. The difference between the Cayman island and us is the fact that the Cayman island is a British colony. Take a stand and tell the EU no, we will not do another back flip. Wow, they got some nerve.

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bcitizen 5 months, 2 weeks ago

Stop appeasing them! The more we appease the more demands they make.

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joeblow 5 months, 2 weeks ago

... our leaders are shortsighted groveling idiots. Expect more of the same!

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TalRussell 5 months, 2 weeks ago

Baloney talk by comrade AG. Tell why in the background there are 195 countries in the world today but only 12 were picked be hoodwinked by the European officials including we colony. Yet the Cayman Islands were not on the targeted for blacklisting list. The Cayman dollar is the only currency on the face the earth worth more than USA dollar? Our dollar is on bending knees praying we will duck out on devaluation. Nod once for yeah, Twice for no?

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thps 5 months, 2 weeks ago

Cayman was in Feb placed on the "non-cooperative jurisdictions" blacklist by the EU.

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TalRussell 5 months, 2 weeks ago

Spin it however you like the Cayman's are not on the "non-cooperative jurisdictions" blacklist by the EU.

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Proguing 5 months, 2 weeks ago

Ignore it, the failed experiment of the EU will be nonexistent in 10 years

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Entrepreneur 5 months, 2 weeks ago

As Neil says: -

"Europe's position effectively represents interference in a country's ability to determine its own tax structure and methods."

Breathtaking arrogance and inappropriateness.

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thps 5 months, 2 weeks ago

If The Bahamas says yes and sets a rate at 5%, they'll want 10% then 15 then 20. You have all the 2000 measures, all of the Tax Exchange Agreements, CESRA, Beneficial Ownership., Common Reproting., no bearer shares, and so on and so forth, Nothing will be good enough.

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tom1912 5 months, 2 weeks ago

The Cayman islands despite being a UK overseas territory is not a colony as such and controls it's own internal affairs and laws and taxation never mind its own currency,much like The Bahamas ŵas before independence [ Although perhaps initially governed by some dubious local MPs ] much like the Isle of Man, the channel islands[ Who are not members of the EU!] even Gibraltar [ Although they still use the PS]

The hypocrisy of the EU is they don't seem to be able to control the level of Corprate Taxation on its on members, the Irish Republic and Luxembourg have some of the lowest Corporation Tax in the EU, thus much to the UK's government annoyance companies such as Amazon, Google, Apple, Macdonalds and the like, base their EU HQs in these two countrys using "the royalty" system to reduce their taxation in larger EU country's where their turnover is biggest,there have been several years believe it or not when one or more of these companys they have posted losses in country's such as the UK. The UK was looking in to taxing such large corporation on their UK turnover to trump the royalty trick, but not an easy task!

The EU is now panicking that the UK may lower its corporation tax becoming the EU's equivalent of a Singapore 10 miles off of the French Coast!

There is some merit in corporation tax set at a reasonable level for a country's tax take to avoid companies not seeing it as worth moving as they say "off shore" location.

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Entrepreneur 5 months, 2 weeks ago

Please launch a law suit against the EU for "conspiracy to injure".

The Bahamas is a sovereign nation that writes its own legislation and laws.

The Bahamian people are not subjects, or a dominion, of the EU.

As the UK decided, the EU politicians are a bunch of overbearing, interfering, unwelcome tyrannical and above all very poor quality people.

The Bahamas should forge closer ties with the UK and Switzerland.

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concerned799 5 months, 2 weeks ago

The Attorney General last night said senior European officials and politicians have warned The Bahamas: "We won't take our foot off your neck until you implement a corporate income tax."

I think the only response is to reverse everything that has ever been done to placate all these alphabet groups over the years, as clearly none of it has worked, and there are only more demands. Give here, and it will only be more demands. And notice how the US still has no regime to disclose beneficial ownership yet escapes any forms of sanctions or plans to do so. No indications the EU is going to take such an approach with the US. Sorry EU going after the weak with extortion wasn't a good idea. You have a problem with financial regulation, there is this thing called the UN we all pay into and have signed up for. We can discuss all matters at the UN. Bye.

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