Friday, May 19, 2017
By NEIL HARTNELL
Tribune Business Editor
The Minister of Financial Services yesterday said warding off the threatened ‘blacklisting’ of the Bahamas was “10.5 on a one to 10 priority scale” for the newly-elected government.
Brent Symonette, whose portfolio also includes trade and industry, and immigration, told Tribune Business that Dr Hubert Minnis’s administration would determine the Bahamas’ approach to automatic tax information exchange within the necessary timelines.
He added that the Government was set to meet with the financial services industry today to get its feedback on the way forward, amid increasing pressure from the Organisation for Economic Co-Operation and Development (OECD) and a threatened ‘blacklisting’ by the European Union (EU).
“We’re meeting with the financial services people tomorrow [today] to discuss it, and we will be able to take a position in very short order and identify it to the public,” Mr Symonette told Tribune Business.
He acknowledged that the Bahamas had a “very tight” window in which to determine its approach for implementing the Common Reporting Standard (CRS), the global standard for implementing the automatic exchange of tax information, and seemingly criticised the Christie administration for leaving the matter to the new government.
“There is a deadline attached, and the Government intends to have a decision made within that deadline,” Mr Symonette said. “The deadline is very tight, and it’s something the previous government left to us to take a decision on.
“As soon as possible, we will take a decision. We have a deadline, and it is a priority. If you want to put it on a scale of one to 10, it’s 10.5.”
The Bahamas has until September 2018 to meet its automatic tax information exchange commitments, but it needs to be seen as making good progress on this soon, or otherwise this nation is likely to end up on the EU’s threatened ‘blacklist’ of non-cooperative countries that is due for publication by year-end 2017.
Mr Symonette said the ‘blacklisting’ threat, which has been played up by OECD officials in a bid to pressure the Bahamas to switch its CRS implementation approach to a multilateral method, as opposed to bilateral, was something the Government is taking seriously.
While the impending 2017-2018 Budget was taking up much of the new administration’s time, Mr Symonette said all relevant ministries and officials were working on the Bahamas’ CRS position.
As revealed by Tribune Business, the Bahamas is now isolated, and under growing pressure, to bow to international demands that it automatically exchange tax information on a ‘multilateral’ basis, with the EU and its members refusing to accept this nation’s preferred approach.
The Bahamas previously agreed to implement the CRS via a bilateral approach that involved negotiating agreements on an individual country-by country basis.
However, the OECD and its developed country members have been steadily increasing the pressure on the Bahamas to switch to the ‘multilateral’ approach, requiring this country to negotiate tax deals with all-comers at once.
The Bahamas has been left exposed by the decisions of Hong Kong, Panama and the United Arab Emirates to switch from the bilateral to multilateral approach, which has left this nation as the last international financial centre (IFC) of significance that is sticking to the former.
Given that it had previously approved the ‘bilateral’ route as an option, the OECD knows it is open to charges of ‘hypocrisy’ and ‘goal-post moving’ if it simply demands the Bahamas goes multilateral.
Instead, its officials are arguing that the Bahamas has left it too late to use the bilateral approach to meet its automatic tax information exchange commitments by the September 2018 deadline.
OECD representatives have employed the analogy of a high-rise building to describe the Bahamas’ situation, saying that all other countries were taking the elevator to the top via the multilateral approach, and this country was the only one using the stairs.
Monica Bhatia, who leads the OECD’s Global Forum secretariat, said the Bahamas was perceived as “the last tax haven standing” and an “outlier” because it was the sole financial centre of any significance to persist with the bilateral approach to CRS implementation.
Several financial industry sources, speaking on condition of anonymity, told Tribune Business that given the EU’s stance and the pressing compliance deadline, combined with this nation’s bilateral ‘isolation’, the Bahamas was unlikely to be able to “hold out”.
Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business previously that the private sector acknowledged the Government may “have to consider a policy change” on how this nation implements the CRS.
She added that there is “no alarm” about this nation having to alter its approach, and emphasised that the Bahamian financial services industry’s priority was to avoid any ‘blacklisting’.