James Smith, minister of state for finance, yesterday told The Tribune that the Bahamas had turned down a number of requests for tax information exchange agreements (TIEAs) from jurisdictions other than the US, on the grounds no further treaties will be signed until the Organisation for Economic Co-operation Development’s (OECD) position on creating a ‘level playing field” had been satisfied.
Mr. Smith said the government had been approached by countries such as Brazil, Germany, France and Australia, who were all seeking a TIEA similar to the one agreed with Washington. The Bahamas has to this point only contemplated such a treaty with the US, as this nation would be unable maintain its Qualified Jurisdiction (QJ) status with the Internal revenue Service (IRS) without such a deal.
The Bahamian financial services sector has long advised the government that maintaining QJ status is vital for this nation’s reputation and without it institutions who are only based in this country would be unable to attain Qualified Intermediary (QI) status. although most Bahamas-based institutions would be able to qualify as QI’s through their home head offices, a failure to obtain QJ status would see the IRS impose a withholding tax on dividends and interest income earned by clients on US securities.
Mr. Smith said yesterday the OECD’s inability to coalesce its member states into a cohesive unit which would apply the “level playing field” criteria on the “harmful tax practices” initiative uniformly has eroded the status of that initiative.
Source: Yolanda Deleveaux, The Tribune
