Wednesday, March 22, 2023
By YOURI KEMP
Tribune Business Reporter
A BAHAMIAN financial services provider yesterday warned it would be “a big mistake” for this nation to rush into implementing the 15 percent global minimum corporate tax rate without first ensuring such a move benefits its economy.
Paul Moss, Dominion Management Services’ president, told Tribune Business that it would be “foolishness” for The Bahamas to race ahead of competitors and implement an initiative being driven by the G-7 countries and Organisation for Economic Co-Operation and Development (OECD) prematurely.
“I think it’s a big mistake for The Bahamas just to jump into a global tax like that because, clearly, we have yet to establish our own income tax in this country, our own corporate tax in this country, and when we do so we need to do so for the benefit of The Bahamas and not for the benefit of anybody else,” Mr Moss said. “If we say that 15 percent is what it is, then we step out of the competitive market just like that.”
Michael Halkitis, minister for economic affairs, told a panel discussion at the recent RF Bank & Trust economic outlook conference that The Bahamas could gain $140m from implementing the 15 percent minimum tax on the local subsidiaries of multinational corporations with an annual turnover of 750m euros or above.
Mr Moss, though, urged the Government to look at what he described as the bigger picture. “If he said that with 15 percent we’re going to raise revenue, from where?” he added of Mr Halkitis. “He has to look at this holistically because, in The Bahamas, we are afraid to say that if we tax people they’re going to run from this country. That’s not the case.
“But if you say that you’re going to implement between a 3 percent to 5 percent corporate rate tax, I can tell you, apart from people living in the country, you will find people running to the country because they want to be transparent but they want to pay low rates of taxes.
“No one is going to come to The Bahamas because, what is the reason or what is the advantage of coming to The Bahamas to pay 15 percent when they can pay 15 percent in the US and in other jurisdictions around the world.”
Mr Moss said The Bahamas can gain a competitive advantage from implementing a low-rate corporate income tax rather than simply following all other countries in adopting the minimum 15 percent. However, it is unclear whether The Bahamas would be able to do this and risk being seen as an outlier, with many suspecting the G-7/OECD initiative is the first step in an initiative to force all countries to adopt the same form of taxation at the same rate.
“I’m an advocate for it,” Mr Moss said of corporate income tax. “I think that The Bahamas has allowed this to slip away from ourselves for far too long. There many people in this country, many companies in this country, who would rather understand how they could exist without paying taxes. If we say to them that they can have a voluntary rate and just give us one percent, let us try to see what we can get.”
Calling successive administrations fearful of making the necessary taxation reforms, Mr Moss added that he “does not agree” that companies will come to The Bahamas simply because we have the benefits of “sun, sand and sea”.
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