Concerns of the Organization for Economic Cooperation and Development (OECD) that The Bahamas has a harmful tax regime continues to be met with some resistance.
In fact, according to the Attorney General Alfred Sears recent developments within the European Union (EU) are now threatening the future of that harmful tax project designed to stop tax evasion.
Minister Sears’ comments came as he addressed the Bahamas Institute of Financial Services seminar at the Sandals Royal Bahamian Resort yesterday.
He said the EU has backed away from demanding on savings instruments from six countries including the United States.
“It has further agreed not to require its members of Belgium, Luxembourg and Austria to implement such information exchange,” Minister Sears said. “Suggestions have surfaced as well that the EU is not prepared to recognize any member country as having potentially harmful tax regimes.”
Minister Sears said 15 OECD members are also a part of the EU. He said, therefore, that any reluctance on the part of the group to support any aspect of the harmful tax projects has significant implications for the project.
He said the International Trade and Investment Organization (ITIO), of which the Bahamas is a charter member, has officially lodged its concerns with the OECD regarding the developments within the EU and their impact on the preservation of the level playing condition of the commitment letters.
The attorney general added that the ITIO has also requested that the OECD immediately convene a meeting of the project in the light of the developments.
“It is worth re-emphasizing that the Government of The Bahamas fully expects that all OECD members and non-members alike which are materially in competition with The Bahamas in the provision of cross-border financial services will have provided the same commitments (in scope and timeframe), as those extracted from the committed jurisdictions, by the time The Bahamas is required to act on its commitment,” Minister Sears said.
The Bahamas has signed a tax information exchange agreement with the United States for the release of information regarding criminal and civil matters. That agreement is consistent with OECD commitments.
In both cases, Minister Sears said the U.S. TIEA is consistent with the intent of the OECD commitment, in that it was concluded through a process of bilateral negations.
Any other OECD member country wishing to have a TIEA with The Bahamas will be required to negotiate as a bilateral arrangement, provided that all preconditions of the commitment have been fully met at the relevant time.
“The Bahamas remains committed to international cooperation as a responsible and significant player in the international trade arena,” Minister Sears said, “However, to avoid jurisdiction arbitrage and flights of services to competitors, the OECD, in order to achieve its objectives, i.e., to curtail so called harmful tax practices, must apply the level playing field principle to its own members and non members.”
The Bahamas in March 2002 executed in favour of the OECD with a letter agreeing to entertain bilateral negotiations with OECD member countries on exchange of information in tax matters.
Minister Sears noted that provided the conditions precedents are met, The Bahamas has committed to bilateral negotiations for exchange of tax information in criminal matters by January 1, 2004 and for exchange of information in civil matters by January 1, 2006.
The attorney general also pointed that as the Bahamian economy moves increasingly into the area of securities law, the need for more Bahamian lawyers to specialize in securities law becomes a greater one.
He challenged the financial experts present at the seminar to help the Bahamas remain competitive.
“We need to ensure that as we attract more mutual funds to our jurisdiction, we have more than a handful of law firms with the expertise to provide the professional
Minister Sears added that The Bahamas remains committed to international cooperation as a responsible and significant player in the international trade arena.
By Yvette Rolle-Major, The Bahama Journal
