Bahamas Must ‘Get Across Line’ On Tax Automatic Exchange
THE Government has been urged to “get across the line before year-end” on global tax information exchange standards, amid hope the relevant legislation will reach Parliament tomorrow.
Michael Paton, a former Bahamas Financial Services Board (BFSB) chairman, told Tribune Business that the Bahamas needed to upgrade its existing legislation to facilitate its switch to sharing tax information on a multilateral – rather than bilateral – basis. Given the heightened scrutiny being applied to international financial centres (IFCs) in the wake of the so-called ‘Paradise Papers’ revelations, Mr Paton said that meeting the Bahamas’ commitments to the international community had assumed extra importance.
The Lennox Paton law firm partner said: “We expect to have the amending Bills tabled in Parliament. My understanding is those are virtually ready to go, and we need to get these across the line before the end of the year.
“Hopefully it gets on the agenda this week or the week after. This is the switch from bilateral to multilateral, so we’re making technical amendments to enable multilateral [information sharing], and amending the international tax co-operation legislation to enable the Bahamas to enter into the Multilateral Competent Authority Agreement.”
That Agreement provides a standard international mechanism and framework for the automatic exchange of tax information, while the Bahamas also has to sign the Mutual Assistance on Tax Matters convention as part of complying with the Organisation for Economic Co-Operation and Development’s (OECD) Common Reporting Standard (CRS).
Mr Paton explained that the Competent Authority Agreement dealt with the technical aspects of tax information exchange, while the convention was a treaty that allowed the Bahamas to determine which of 106-108 countries it will “exchange information with on an automatic basis”.
“It basically puts the Bahamas in position to fully automatically exchange tax information, starting next year,” he added of the anticipated legislative package. “There’s going to be a lot of technical stuff moving across the legislative agenda in the next few weeks.”
#Tanya McCartney, the BFSB’s chief executive, told Tribune Business that the Government had informed the financial services industry that the necessary CRS-related legislation will be tabled in the House of Assembly this month.
“We got an update that Parliament is to review updates to the automatic exchange legislation in the month of November,” she said. “We hope it will be this week, but certainly in November, and also the guidance note will be finalised in the month of November.
“We are waiting to hear from the OECD on our request to accede to the Convention. We have done what we need to do, but there is a process associated with that, and we were assured by the Government they are going through that process.
“BFSB is actively engaging with the Government to ensure as a jurisdiction we are proactive, and taking all steps necessary to assure these global entities that the Bahamas is committed to complying with the required standards and best practices.”
The Bahamas had initially sought to comply with the OECD’s CRS, the global standard for automatic tax information exchange, via a bilateral approach that would have involved sharing details on a country-by-country basis.
However, it came under heavy media and international pressure, inspired by the OECD and its surrogates, to switch to the multilateral approach which involves information exchange with all-comers.
The Bahamas was also left exposed by the likes of Hong Kong, Singapore and the United Arab Emirates (UAE) switching from the bilateral to the multilateral method, resulting in this nation being branded the global ‘holdout’ amid thinly-veiled ‘blacklisting’ threats by the European Union (EU) and OECD.
The former Christie administration left the decision to its successor, and one of the new government’s first actions was to inform the OECD that the Bahamas, too, would move to the multilateral approach.