NASSAU, BAHAMAS — The government yesterday reasserted that it is this nation’s ‘sovereign right’ to determine the tax structure best suited for the ongoing development of the country.
This as G7 finance ministers over the weekend agreed to a landmark deal to battle tax avoidance by making big companies pay more tax in the countries where they do business.
The deal which was announced on Saturday between the G7 group of wealthy nations, namely the United States, the United Kingdom, France, Germany, Canada, Italy and Japan, as well as the European Union – could reportedly result in billions of dollars flowing to governments to pay off debts incurred during the COVID-19 crisis.
The deal agreed in principle that multinational companies pay a minimum tax rate of at least 15 percent in each country they operate. The agreement aims to close loopholes multinationals have exploited to reduce their tax bills by ensuring they pay more in the nations where they operate.
The Ministry of Finance in a statement yesterday acknowledged the recent statement by G7 nations regarding their position on proposed global tax reform.
“The public would note that on Friday June 4, the leaders of the G7 nations agreed to endorse calls to reform the global tax system by, inter alia, the introduction of a global minimum corporate tax rate for multinational entities,” the statement read.
“The discussion on reforming the international taxing structure for multinational entities is being directed by the 24 member OECD/G20 Steering Group of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). These discussions have been ongoing since 2018.
“The Bahamas has been an active participant in the process. Not only is The Bahamas a member of the Inclusive Framework on BEPS, but the country also has representation on the Steering Group with the election of Stephen Coakley Wells of the Ministry of Finance to the Steering Group, last year,” the statement noted.
It continued: “Notwithstanding agreement by the G7, the framework proposed by the Steering Group will require the consensus of the 139 countries of the Inclusive Framework on BEPS before going on to the G20 finance ministers for ratification later this year.
“The Ministry of Finance is conducting an assessment of the impact of these proposals and what implications they may have for the domestic tax regime of The Bahamas. The Bahamas reasserts its sovereign right to determine the tax structure best suited for the ongoing development of the country.”
The statement further noted that the ongoing multi-lateral discussions are “timely” given the recent announcement by Prime Minister Dr Hubert Minnis in the Budget Speech regarding the ministry’s imminent comprehensive tax study.
“The output of this in-depth, empirical assessment will inform ongoing tax reform efforts in pursuit of greater fairness and equity within the country’s tax regime,” the statement read.
“The Ministry continues to remain proactive to shape a position that ensures that our financial sector remains competitive and dynamic. Through the country’s representation on the Steering Group, the Government will ensure that the positions of no/nominal tax jurisdictions like The Bahamas are ventilated and considered.
“At the same time, the government will work with industry stakeholders to ensure that the jurisdiction is poised to take advantage of whatever opportunities arise from any changes to the international taxation architecture,” it added.