By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas “has no room for failure” in implementing automatic tax information exchange, a prominent QC warned yesterday, adding that it would be “extremely prejudicial” to this nation’s interests to miss the 2018 launch date.

Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, told Tribune Business that Parliament needed to pass the enabling legislation before the upcoming Christmas break, given the Organisation for Economic Co-Operation and Development’s (OECD) “scepticism” towards the Bahamas.

With the OECD unlikely to let-up in its criticism of the Bahamas for choosing to implement automatic tax information exchange via a bilateral approach, Mr Moree again urged the Government to have negotiated deals with between 60-80 countries by the 2018 New Year.

He added that these nations had to be substantive, such as Canada and the European Union (EU) countries, if the Bahamas was to counter OECD-linked claims that it would only conclude bilateral information sharing deals with insignificant states.

Praising the Government for already seeming to move on this issue, Mr Moree said the Bahamas had to show its compliance “with both the letter and the spirit” of the Common Reporting Standard (CRS), given that OECD attacks on this nation are unlikely to “diminish”.

The OECD has developed the CRS as the global standard or benchmark for automatic tax information exchange, and Mr Moree hailed as “a good first step” the Christie administration’s move to bring the enabling legislation to the House of Assembly.

“I think it is critically important for the Bahamas to pass the legislation relating to the automatic exchange of tax information, and the CRS, before the end of this year,” the senior McKinney, Bancroft & Hughes partner told Tribune Business.

“In that regard, it is very beneficial that the Bill was tabled in the House this week. It is critically important for the Government to pass, and bring into force, all of that legislation relating to the automatic exchange of information obligations, particularly the implementation of the CRS.”

He added: “We, as a country, must ensure this legislative process is completed as soon as possible in order to reassure the international community, and specifically the OECD, of our commitment to meet the deadline of January 1, 2018.

“I would strongly encourage the Government to expedite passage of that Bill through the House and the Senate before the Christmas break.”

The Automatic Exchange of Financial Account Information Bill 2016 went through its second reading (debate stage) in the House of Assembly on Wednesday, although there is much more to be dealt with than just the Act.

Mr Moree said it was “equally important” for the Bahamas to promulgate the regulations accompanying the Act, and “formally adopt” the guidelines, so that all the infrastructure for implementing the CRS’s automatic exchange of tax information is in place.

The “entire package” also includes the Competent Authority Agreement, plus “templates” for upgrading existing ‘upon request’ Tax Information Exchange Agreements (TIEAs) that the Bahamas has with other countries. There are also templates for automatic tax information exchange agreements with countries that do not possess existing TIEAs.

Michael Halkitis, minister of state for finance, said on Wednesday that the Bahamas had already been approached by other countries to enter into bilateral automatic tax information exchange agreements.

And this nation had also sent out invitations to members of the OECD’s Global Forum, inviting them to begin negotiations with the Bahamas.

Mr Moree told Tribune Business he understood that the “first tranche” of invitations included 44-45 countries, including all the EU member countries.

He said the process of negotiating bilateral automatic tax information exchange agreements must occur in parallel to all the Bahamas’ other implementation work, including legislation and putting in place the necessary systems infrastructure.

“The OECD has expressed scepticism that we will be fairly slow, and selective, in agreeing bilaterals with other countries,” Mr Moree told Tribune Business.

“And while there is no basis to support that position, we nevertheless have to demonstrate that we are committed to putting in place somewhere, in my view, between 60-80 bilaterals by January 1, 2018, and that we have actively taken critical and tangible steps in that process.

“That is important, because it is the only way we will be able to demonstrate to the OECD and international community that we will fulfill our commitments. “

He warned: “Any slippage in the timeline will be extremely prejudicial to the Bahamas, and the international community will be vigilant in monitoring our progress. We must make sure we hit all the timelines and deadlines.”

The Bahamas has already come under OECD-inspired media attacks over its decision to adopt the bilateral approach to automatic tax information exchange, rather than the multilateral approach where it would provide information to all-comers.

Many observers view this as an attempt to ‘bounce’ the Bahamas into switching to the multilateral approach, something it has successfully resisted to-date.

The attacks have occurred despite the OECD itself approving the bilateral approach as an option countries could take. Many believe its criticism of the Bahamas was motivated, at least in part, by needing to keep all those who have selected the multilateral approach ‘on board’, and to prevent any ‘backsliding’ by those states.

Mr Moree told Tribune Business: “The pressure and somewhat strident criticism of the bilateral approach by the Bahamas is not going to diminish.

“I think we can expect we will continue to be under the spotlight, and consequently there is no room for failure in this process.

“I am confident that, as in the past, the Bahamas will deliver on its commitments, and we will be a full and responsible participant in the exchange of information under CRS.”

Mr Moree also acknowledged criticism that some of the Bahamas’ existing TIEAs were relatively meaningless for tax information exchange purposes, given that they were either with other international financial centres (IFCs) or small countries with limited populations.

“The other criticism that has been made is that we will be selective with our bilaterals,” he added. “We have to indeed show that is not going to be the case.

“We do have to include in our first tranche the major players who are engaged in the financial services industry, so we can demonstrate we are fully committed to both the letter and spirit of this process.”

Pointing out that the Bahamas has met all its obligations and timelines to-date, Mr Moree said the Government also needed to dedicate the necessary attention and resources to automatic tax information exchange.