By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday hailed last week’s passage of a United Nations (UN) resolution that potentially opens a path towards a more just and fair approach towards resolving international tax disputes.

Philip Davis KC, in a statement, said the decision to adopt a resolution put forward by Nigeria provides potentially the best opportunity for The Bahamas, other international financial centres (IFCs) and developing countries to wrest control over international tax matters away from the likes of the Organisation and Economic Co-Operation and Development (OECD) and European Union (EU).

Confirming that The Bahamas supported the resolution on the ‘Promotion of inclusive and effective international tax co-operation’, which seeks to establish a framework convention on international tax under the UN’s oversight, he added that this nation has “long championed” a move to “a more inclusive tax governance framework” where all countries are treated equitably and have a say.

“Our commitment to maintaining the highest tax compliance standards is unwavering, and this historic moment is a testament to our dedication to overcoming the inequities propagated by current tax policy frameworks and institutions,” Mr Davis said.

“We have consistently emphasised the need for a reformed global tax structure that honours the sovereignty of nations like The Bahamas, which have been disproportionately affected by the ‘Global North’s’ biased policies.

“The Bahamas is fully prepared to engage with the UN to shape a tax system that ensures transparency, justice and sustainable development. We pledge to lead and advocate tirelessly for policies that protect the economic interests of all countries, with a focus on those historically sidelined in global tax negotiations.

“The Bahamas will draw on our experiences to support a fair, transparent, and balanced international tax regime.” The OECD, which is effectively a club of the world’s richest nations and most advanced economies, has dominated global tax policy for almost three decades ever since it launched its anti-IFC drive in the mid-1990s with the ‘harmful tax practices’ initiative.

The UN resolution on international tax co-operation was passed by 125 votes in favour to 48 against, with 9 abstentions - Armenia, Costa Rica, El Salvador, Iceland, Mexico, Norway, Peru, Turkey and the United Arab Emirates. It survived a last-minute attempt by the UK to water it down.

“The representative of The Bahamas, speaking on the resolution as a whole after the vote, called it an important step towards an inclusive and equitable global tax system. For over six decades, international tax policies formulated and dictated by OECD have failed to address inherent challenges faced by the ‘Global South’,” a UN report said of The Bahamas’ stance at the meeting.

“Given the ‘disequilibrium’ of the international financial architecture, the resolution envisions a future that benefits all countries through inclusivity and co-operation.” The likes of the OECD and EU have long been viewed as imposing arbitrary, unfair standards on The Bahamas and other IFCs, their members failing to abide by similar measures and benchmarks themselves;

And the use of ‘blacklistings’ and similar tactics, given such a backdrop, is perceived as trying to eliminate The Bahamas’ competitive advantage and drive it out of the global financial services business by making it increasingly difficult to do business here.

Mr Davis yesterday released his September 15 letter to UN secretary-general, Antonio Guterres, in which he argued that the nations leading ‘blacklisting’ attacks against The Bahamas, and undermining its economy and resilience, are also the very same ones most responsible for global warming and the climate crisis that now threatens the country’s very existence.

“The Global South also tends to be more vulnerable to the effects of climate change, natural disasters and other environmental challenges,” Mr Davis wrote. “The climate crisis is largely created by industrialised countries, many in the Global North. The effect of the climate crisis is felt disproportionately by small developing countries like The Bahamas.

“This is exacerbated by the arbitrary blacklisting of these same vulnerable countries, such as The Bahamas, by the very same countries that are responsible for the climate crisis. For example, when it comes to insurance, a significant percentage of monies owed to us by European reinsurers is punitively retained by the EU.

“This is because of the EU’s designation of The Bahamas as ‘uncooperative’. As a result, any remittances from European reinsurers that result from insurance claims are automatically reduced by at least 25 percent. We are thus poorer and less able to rebuild because of the effects of the climate crisis,” Mr Davis continued.

“It is astonishing that the countries that are causing The Bahamas to be more vulnerable by way of their contribution to the climate crisis are the same ones who are punitively impacting our ability to rebuild from the adverse effects of the climate crisis.”

Mr Davis argued that the OECD’s approach to international tax administration and co-operation has “harmed the small states of he Caribbean” because an “equitable standard” in terms of how it is applied to all has not been developed.

“Although some may debate the extent of the impact, sovereignty has been infringed, tax competition threatened and economic growth and development hindered,” the Prime Minister added. “Against this backdrop, the risk of climate change and rising sea levels have exacerbated the vulnerability of already-fragile economies in the region.”

Mr Davis said The Bahamas plans to present “a research paper” outlining the impacts this has had on its economy, and signalled this nation’s willingness to host a side event on the subject of taxation, development and human rights at the UN on December 10, 2023, which is Human Rights Day.

The Bahamas is also planning to host a conference at the University of The Bahamas (UoB) during the 2024 first quarter on the same themes. “This will gather working papers from scholars representing the Global South,” Mr Davis said. “These papers can help build consensus and support this proposal on a political level through research and analysis, and tested by debate.”