Senator Dion Foulkes on Monday said The Bahamas must comply with the European Union (EU) because, “the imposition of economic sanctions” would have a “disastrous impact on the country”.
Foulkes’ comments came during a debate on the Multi-National Entities Financial Reporting Bill, 2018, in the Upper Chamber yesterday.
The bill is the first of an anticipated series of proposals needed to enable The Bahamas to comply with its obligations as a member of the inclusive outline of countries that have joined the Base Erosion and Profit Shifting (BEPS) project, which was launched by the EU.
“The Bahamas agreed to join the BEPS in December 2017, and we were then blacklisted in March 2018,” Foulkes explained.
Nearly a month and half after it was blacklisted by the EU, The Bahamas was removed from that list of non-cooperative jurisdictions last Friday.
Foulkes responded to anyone questioning why the government would “accept such unrestrained exercise of extraterritorial power by the EU”.
“For any country, the loss of such privileges and the imposition of economic sanctions would have had a disastrous impact, much more so on a small and open economy such as The Bahamas, where more than 90 per cent of our tourist come from the United Stated of America (USA),” he said.
“The Europeans have similar powers as the USA in the financial services arena. Hence, a blacklisting could easily have resulted in the loss of correspondent banking relations, where banks abroad and particularly in Europe, could easily have decided to take “de-risking measures” by shutting off commercial relations with banks and financial institutions located in The Bahamas, on the basis that The Bahamas is a “risky jurisdiction.
“If correspondent banks in Europe were to stop taking deposits of money or payments made from The Bahamas, the effect would be exactly the same as if we were cut off from the SWIFT system by the USA; namely, that money could not go out of or come into The Bahamas by a wire transfer.
“Business would come to a screeching halt and the economic damage would be devastating and long-lasting for the Bahamian economy.”
Foulkes emphasised that because The Bahamas is now off the blacklist, “We must pass laws to address the other four remaining issues in the listing of so-called harmful measures.”
The Bahamas had been included in the blacklist in March, as the country’s tax rules and practices were deemed not in line with EU standards.
Following an aggressive commitment from Finance Minister and Deputy Prime Minister Peter Turnquest, as well as Financial Services, Trade and Investments Minister Brent Symonette, to implement changes, EU tax officials recommended moving this jurisdiction from the blacklist to a so-called grey list.
This article was written by RIEL MAJOR, Eyewitness News intern.