By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

The Prime Minister yesterday signalled that The Bahamas will soon escape France’s national tax blacklist “within the next few days”.

Speaking in Parliament, Philip Davis KC hit back at criticism from the Opposition over The Bahamas being removed from the European Union’s (EU) blacklist yet staying on France’s own blacklist. He hinted that Ryan Pinder KC, the attorney general, will speak on this in the coming days as does o’t “take these things lightly”.

“I think when we spoke about some financial Bills the other day, the member from St Anne’s [Adrian White] indicated… I think he sought to diminish the efforts and gain we obtained in having been taken off the EU blacklist by retorting, ‘but you’re still on the French blacklist’. Remember he said that?” asked Mr Davis.

“Now that’s a contradiction in terms because France is a member of the EU. And usually what the EU says goes through to all the jurisdictions. He was correct, but you know, my Attorney General don’t sit down and take these things lightly, and I suspect within the next few days, you’ll be hearing from him on that subject matter as to whether or not we are still blacklisted. I ga leave that to him.”

Both France and the Netherlands kept The Bahamas on their own tax blacklists for the whole of 2024 despite the EU’s late February decision to remove this nation from its own. 

Both states are members of the 27-nation EU, but the bloc’s determination that The Bahamas had remedied alleged deficiencies in its ‘economic substance’ reporting regime and was worthy of removal made no impact on France or the Netherlands’ national policies.

Indeed, according to a note from Deloitte & Touche’s French affiliate, France decided on February 17, 2024, to maintain The Bahamas as one of five jurisdictions subject to full defensive measures - including punitive withholding taxes on payments such as interest, dividends and royalties - for the whole of last year with that decision to only be reviewed come 2025.

The French move was decided just three days before the EU resolved to delist The Bahamas on February 20, 2024. As for the Netherlands, the decision to maintain The Bahamas’ blacklisting was taken on December 29, 2023, and remained in effect without change for a whole year.

“Inclusion of a jurisdiction on the Dutch blacklist applies for the entire calendar year 2024 with an annual revisit of the list effective the following calendar year,” one Dutch accounting firm said. Those jurisdictions targeted are ones with no or a low rate corporate income tax of 9 percent or less, which means The Bahamas’ plan to implement the 15 percent minimum global corporate tax rate may be of some help.

However, in the meantime, The Netherlands will impose similar measures to France via withholding taxes at a 25.8 percent rate, controlled foreign company rules and other strictures designed to discourage business with The Bahamas and other low-tax states.

While national blacklistings are less comprehensive and impactful than those imposed by multinationals, such as the EU and Organisation for Economic Co-Operation and Development (OECD), they nevertheless pose a reputational risk and undermine the ‘ease of doing business’ with entities and individuals from those nations by adding to the cost and time associated with financial transactions.

Mr Pinder last March blasted the French decision as “complete and utter foolishness”. He told the Society of Trust and Estate Practitioners (Bahamas) conference that he had conveyed such sentiments to the French ambassador when they and a delegation were visiting The Bahamas the previous week.

He questioned the logic in France’s decision to keep The Bahamas on its list of non-cooperative jurisdictions for tax purposes when it was a member of the same EU that, just three days later, delisted this nation from the 27-country bloc’s separate blacklist after determining it had remedied deficiencies in its economic substance reporting regime.

Mr Pinder said France’s decision to keep The Bahamas on its blacklist was a “policy decision” that a minister could reverse if they saw fit. “The French were at the meeting. They are members of the OECD. The FHTP (OECD Forum on Harmful Tax Practices) unanimously agreed to the process,” he added. “They are members of the European Union. The European Union agreed to the process.

They were very much aware on January 1 that we had completed our obligations of exchanging [economic substance] information. Yet they say because they decided at their meeting, which was two weeks prior to the EU’s, they won’t follow the EU’s directive.

“I told them this is complete and utter foolishness. This is a policy decision by their government. They can go right back right now and have a minister change that policy decision and remove us from their list. Otherwise, I have no more time to speak about this.”