By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The deputy prime minister yesterday said he was unaware of any further Swiss-owned financial institutions preparing to exit The Bahamas while acknowledging the continued pressures on the sector.

K Peter Turnquest, pictured, speaking to reporters assembled outside the Cabinet Office, said he had not heard "anything of late" when it came to a further exodus of international banks from The Bahamas.

He was responding after Anthony Ferguson, CFAL's principal, told a webinar last week that he "fully expects" to another five to seven Swiss banks to exit The Bahamas within the next 24 months. He added that the financial services industry had contracted by 75 percent since 2000, with its gross domestic product (GDP) contribution dropping from 25 percent to around ten percent.

Julius Baer, a major Swiss-owned financial institution, announced its departure from The Bahamas prior to COVID-19, although its portfolio was subsequently sold to Ansbacher (Bahamas) - an affiliate of Mr Ferguson's CFAL.

"We know the jurisdiction continues to face challenges with respect to all of the international regulations and standards that have been shifting or, as we say, the goal post moving, but at the same time we see persons that are still interested in coming to The Bahamas and clients that are interested in this jurisdiction," Mr Turnquest said.

"So we can see some consolidation, but I believe the jurisdiction will remain viable for those wealth management clients that are not dependent upon tax benefits but rely upon the professional services that are provided from this jurisdiction."

Turning to taxation in the digital economy, Mr Turnquest added: "There is a huge international debate about taxing rights for the digital economy, where the service may be provided from one jurisdiction for the benefit of consumers in another jurisdiction, because it does affect the tax base on both sides of that equation.

"So it is a very recent and current live debate that's being had by the global tax forum, of which we are a part and we'll see how that shakes out. It is a complex issue and something we are mindful of. As you know, from last year we amended the VAT rules where Airbnb, for instance, they provide bookings in the US for a service that is delivered in The Bahamas, and we amended our rules such that those bookings are not VAT-able, but collecting the tax is another technical issue because now you're talking about legal jurisdictions."

Mr Turnquest, in leading off the 2020-2021 budget debate, said the VAT Act will be changed "to clarify that all e-commerce operators are required to register for VAT, whether they provide their services through an agent or directly to consumers. Although this had always been implicit within the VAT Act, we thought it best to clarify the requirement given that the footprint of digital commerce will continue to expand in the domestic economy".