Ministry of Finance: Blacklist avoidance sends a “strong signal”
NASSAU, BAHAMAS – The Bahamas was not included on the European Union’s updated list of non-cooperative jurisdictions for tax purposes, which was published yesterday.
In a statement, the Ministry of Finance said the decision reflected the government’s efforts to “safeguard the global competitiveness of the financial services industry”.
“The government is very encouraged and pleased by the EU’s decision to not include The Bahamas on its list of non-cooperative jurisdictions,” Prime Minister Dr. Hubert Minnis said.
“The decision is the result of a strategic and comprehensive approach by the government’s team in consultation with stakeholders.
“I would like to thank the private sector for its valuable contribution, and reiterate our government’s commitment to continue to do what is necessary to maintain the standing of The Bahamas as a respected international financial centre.”
In addition to the jurisdictions previously included — American Samoa, Guam, Trinidad and Tobago, Samoa and US Virgin Islands — the updated list includes Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, United Arabic Emirates and Vanuatu.
According to the EU, those jurisdictions did not sufficiently implement the commitments made by the agreed deadline.
The government, which has engaged in numerous bilateral meetings with EU representatives, and implemented what it called broad measures to prevent the use of Bahamian corporate vehicles as conduits for tax avoidance and evasion, said that strategy has enabled the country to be considered a partner on international standards and information exchange.
Yesterday, Deputy Prime Minister and Minister of Finance Peter Turnquest commended the technical working committee for their exhaustive efforts, noting that it has pushed for over a year to move the reform process forward — a process that required the “strengthening of our legislative and regulatory framework, among other things”.
“Our ongoing cooperation with the EU and the positive evaluation of the country sends a strong signal to the international community that The Bahamas’ financial services industry is stable and governed by a sound regulatory regime,” Turnquest was quoted as saying.
“The government will continue to promote engagement with all stakeholders on these issues to ensure The Bahamas remains the preferred jurisdiction of choice for financial services in the region.”
Outside Cabinet, Turnquest said there was a lot of work to be done, namely, implementing legislation passed, which will require “significant effort”.
He acknowledged that upcoming regulations being considered by the commission, including digital service tax for example, and The Bahamas’ need to keep on top of these.
In its statement, the ministry expressed its continued commitment to comply with evolving international standards and pointed to its investment in financial and human capital resources in various ministries and government departments.
Changes to date, included, but are not limited to, the Commercial Entities (Substance Requirements) Act, 2018, which requires a wide range of entities must demonstrate real business activity and have a substantive economic presence in the country; legislation that remove preferential tax exemptions of resident and non-resident companies; amendments to the Penal code, which make tax evasion a crime in The Bahamas; and the Beneficial Ownership Act, which requires that beneficial ownership details of corporate entities are filed in a secure government database.
Following the EU’s in-depth analysis of The Bahamas’ regulatory framework and controls to prevent money laundering and terrorism financing, the country was blacklisted by the commission in February due to strategic deficiencies in its anti-money laundering and counter-terrorist financing legislation.
The blacklisting exposed The Bahamas to reputational damage and posed a risk to its financial services industry, one of the pillars of the country’s economy.
The prime minister travelled to Brussels in January to meet with EU officials.
He called the meeting constructive, saying it provided The Bahamas with an opportunity to ensure the commission fully understands the scopes of the country’s efforts to comply with the international standards.