Passage brings The Bahamas in full compliance with EU tax standards
NASSAU, BAHAMAS – In just a few weeks, the European Union will decide whether or not The Bahamas will be blacklisted once again, but in an effort to avoid a possible breakdown of the financial services sector, Parliamentarians on Wednesday began debate and last night passed a compendium of bills intended to keep The Bahamas off the dreaded list.
The passage of these bills will allow The Bahamas to be in full compliance with the European Union’s tax standards, and it will hopefully ensure that the country remains off the blacklist when the international body meets at the end of January.
Deputy Prime Minister and Minister of Finance, Peter Turnquest said there is a fear that some of the bills, specifically the Commercial Entities Substance Requirements Bill, which requires foreign firms to have a physical presence and economic substance in the country, will cause some international businesses to leave. He added, however, that this would present Bahamians with new job opportunities.
“There is a risk that some entities may decide they want to leave the jurisdiction,” Turnquest said. “Of course we cannot control that, but the truth is there is nowhere to escape to because all jurisdictions will have to follow these rules.
“These new features will offer opportunities for local talent to be employed in real substantive activities, in respect to operations that have been here, which there was not a requirement for any psychical operation in the country.”
As it relates to the removal of the Preferential Exemptions Bill, 2018, which allowed foreign investors to have certain tax breaks that are not offered to Bahamians, Minister Turnquest said international businesses who are currently receiving incentives will continue to enjoy them until 2021.
Turnquest also made it clear that the government is not targeting Bahamians with the new Nonprofit Organizations Bill.
“The Bill creates a registrar of non-profit organizations (NPOs) and requires all non-profit organizations in The Bahamas to be registered and to provide details on its purpose and objectives.
“The Bill also imposes a strict requirement for NPOs to maintain detailed financial statements to demonstrate that the NPOs funds have been applied in a manner that is consistent with the objectives of the NPO.
“The overriding objective of this Bill is to provide for regulations to ensure that NPOs are operating in a transparent manner and are not engaged in activities which constitute an identified risk as defined in the Proceeds of Crime Act (Ch 93), namely activities involving corruption, cybercrimes, human trafficking, money laundering, or financing of terrorism or proliferation or financing of weapons of mass destruction.”
Turnquest said Financial Services is the second industry of The Bahamas, which provides high-level jobs and contributes 15 per cent to the Gross Domestic Product.
If the country were to be blacklisted again, Turnquest said it could result in financial institutions leaving the jurisdiction causing loss of jobs, banks implementing ‘de-risking’ strategies which puts them at risk of losing access to the global financial system, and the withdrawal of Correspondent Banking Relations (CBRs) from banks.