The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent QC yesterday urged the Bahamas to “immediately” begin the process of seeking out automatic tax information exchange partner countries, arguing that it needed to seal 50-60 such agreements by the 2018 deadline.

Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, told Tribune Business that the Bahamas should not wait to pass the enabling legislation, and accompanying regulations, to deliver on its international commitments.

He recommended that the Government start sending out “invitations” to other countries, in a bid to initiate automatic tax information exchange agreement negotiations, within the next two weeks - a timeline that coincides with when the draft legislation should be released for industry/public consultation.

Faced with an OECD-inspired media onslaught, Mr Moree warned that the Bahamas could ill-afford to be ‘blacklisted’ by either this organisation or the European Union (EU), as this would be “extremely dangerous” for the financial services industry’s health.

With both the Organisation for Economic Co-Operation and Development (OECD), a front for the G-7/G-20 nations, and the EU threatening such action, Mr Moree urged the Bahamas to respond proactively and ‘get ahead’ of the timelines for implementing its Common Reporting Standard (CRS) obligations.

“In my view, the Bahamas should not wait until the enabling legislation has been passed to send out invitations to countries to become information exchange partners under the CRS,” Mr Moree told Tribune Business.

“This process should start immediately; within the next two weeks. Because we have chosen the bilateral route, an approach approved by the OECD itself, the process has to begin as soon as possible.”

The well-known QC implied that doing so would be the best possible defence to charges by The Economist magazine, and International Consortium of Investigative Journalists (ICIJ), that the Bahamas is a rogue, uncooperative nation that is singlehandedly undermining global efforts to crack down on so-called “tax dodgers”.

The international media attacks appear to have the blessing, if not the full support, of the OECD, which is trying to build enough pressure to force, or bounce, the Bahamas into abandoning its chosen bilateral approach to CRS implementation in favour of the multilateral route.

Switching to the latter would force the Bahamas to exchange tax information automatically with ‘all-comers’, as opposed to individual countries that approach it on a bilateral basis.

The OECD’s tax policy head, Pascal Saint-Amans, also broke cover in an interview with Spanish newspaper, El Mundo, in which he threatened that the G-20 would place the Bahamas on a ‘blacklist’ in 2017 if it did not bow to the multilateral CRS approach.

To counter such threats, Mr Moree told Tribune Business that the Bahamas needed to send ‘invitations’ to all 27 EU member states, plus other OECD members and major countries that would have an interest in automatic tax information exchange with this nation.

“The pragmatic reality is that we’re probably going to have to ask every member of the EU to enter into negotiations for the automatic exchange of information as a starting point,” he explained.

“There’s no reason to delay that process; the issuance of invitations to participate in negotiations with us. We don’t have to wait for passage of the enabling legislation.

“By 2018, when the Bahamas has committed to starting the automatic exchange of tax information regime, we need 50-60 countries signed up on bilaterals. These have to be major countries, including the OECD members, the EU members and other large jurisdictions,” Mr Moree continued.

“That will show the OECD and international community that we are serious about our bilateral commitments.”

Targeting EU members states could also ‘kill two birds with one stone’ where the Bahamas is concerned, given that the European Commission recently ‘red flagged’ this nation on two out of three criteria employed to measure how co-operative countries are on fiscal transparency.

The EU is also threatening to ‘blacklist’ countries that fail to meet its desired standards come 2017, and Mr Moree said it was critical for the Bahamas and its financial services industry to escape any national or international ‘blacklists’.

“It would be extremely dangerous for the Bahamas to be on any blacklist of any member of the EU,” he told Tribune Business.

“It seems to me the best answer to our critics is to get these four steps [to implementation] in place on time, start negotiations on time, and have 50-60 bilaterals signed up on day one, based on our commitments. That is a process we have to focus on, and have to deliver on.”

Mr Moree explained that there were four “different stages” involved in the Bahamas meeting its CRS automatic tax information exchange commitment, starting with the passage of the enabling legislation through Parliament.

This includes the Automatic Exchange of Financial Account Information Bill, accompanied by regulations bearing the same name, which Mr Moree said should be issued for industry consultation either later this week or early next. The Ministry of Finance’s guidance notes are also due to be circulated for comment within the next seven to 10 days.

Mr Moree added that the Bahamas was also “well on the way” with stage two, which involves selecting the legal basis for the automatic exchange of tax information.

He explained that this nation has opted to use Tax Information Exchange Agreements (TIEAs), which will take the form of “two templates”. The first will “upgrade” the Bahamas’ existing TIEAs that facilitate the exchange of information upon request, while the second will be applied to new partner countries.

These TIEA ‘templates’, and the Competent Authority Agreement, making the Ministry of Finance’s financial secretary the designated exchange contact point, are also due to be circulated for industry consultation within the next seven to 10 days.

The third and fourth stages, Mr Moree added, involve the implementation of the information technology (IT) infrastructure to facilitate information exchange, and putting in safeguards to protect the security/confidentiality of data exchanged.