It’s a sensitive struggle between offshore financial jurisdictions holding on to their banking secrecy while complying with international pressures for transparency about tax evaders.
It’s also a priority for a grouping of the world’s richest industrialized nations, the Organization for Economic Cooperation and Development [OECD], that is waging its own campaign against what it calls harmful tax havens.
“The OECD and the United States will continue to press for Tax Information Exchange Agreements [TIEA] with respect to both criminal and later civil matters,” State Minister for Financial James Smith said.
But there are nagging challenges to the OECD’s Harmful Tax Project and its timetable for tax information exchange. It is sure to be one of the issues thrashed out at its Global Tax Forum next week in Ottawa, Canada.
The Bahamas signed a TIEA with the U.S. in January of last year to help freeze terrorist funds.
Two months later, the government gave the OECD its word that it would improve transparency of its tax and regulatory systems.
Drafting the Tax Information Exchange Act 2003 is a step in that direction.
There is another angle to the issue; there are jitters by offshore centres that European Union taxing rules will undercut them against rivals like Luxembourg and Switzerland.
The OECD is pushing a 2005 deadline for offshore jurisdictions to meet beefed up tax transparency requirements, but OECD members have at least until 2010 to keep their treasured banking secrecy.
It’s something that Bahamian financial officials have been criticizing for some time; pushing their campaign for a level playing field.
The Minister of Investments and Financial Services Allyson Maynard Gibson made it clear that the draft bill being circulated would deal exclusively with the exchange of tax information with the U.S.
“The government’s firm position is that we will enter into a tax exchange agreement only with the United States of America,” she said indicating that the current administration has not changed the position of the former government.
In response to the OCED’s Harmful Tax Practices project, 32 jurisdictions have made political commitments to engage in effective exchange of information for criminal tax and civil matters, according to the organization’s 2003 progress report on Improving Access to Bank Information.
Nations in the Caribbean region that have either given their word or made a pact for TIEAs are; Anguilla, Aruba, Bermuda, British Virgin Islands, Cayman Islands and the U.S. Virgin Islands.
The Bahama Journal
