The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian financial services provider yesterday said the country is failing to “take the bull by the horns” after it was ranked as the world’s 12th most harmful corporate “tax haven”.

Paul Moss, president of Dominion Management Services, told Tribune Business that The Bahamas was “wasting time” on implementing a low-rate corporate income tax with the rankings, by the anti-international financial centre (IFC) group, the Tax Justice Network, a further reminder of the direction this nation and its competitors are being pushed in.

The Corporate Tax Haven Index, which the Tax Justice Network described as “a ranking of jurisdictions most complicit in helping multinational corporations underpay corporate income tax”, placed The Bahamas well below the top three places which featured its Caribbean rivals the British Virgin Islands (BVI), the Cayman Islands and Bermuda in that order.

The Netherlands, which ironically has the Bahamas on its national blacklist for having a zero corporate income tax rate, was in fourth position while Switzerland, Luxembourg, Hong Kong, Jersey, Singapore, the United Arab Emirates and Ireland were all viewed as more harmful than this nation which finished one spot ahead of the US.

However The Bahamas, which the Tax Justice Network alleged “is responsible for 3.28 percent of the world’s corporate tax abuse risks”, suffered for its lack of any personal or corporate income taxes. The index argued that this provides “unrestrained scope” for corporate tax abuses.

Mr Moss said the index provided further evidence of the direction the world is moving in, and the need for The Bahamas to proactively position itself ahead of coming regulatory and tax initiatives by implementing a corporate income tax regime designed for its own purposes rather than having it imposed from outside.

Dismissing the Government’s stance, as articulated by Carl Bethel QC, the attorney general, that it is waiting to see if an international consensus forms on corporate taxation, Mr Moss told this newspaper: “We are on the ocean in a life raft with no one coming to our rescue, no support, but there are things we can do to better our situation.

“We are procrastinating, wasting time, hoping it all goes away, but it’s not going anywhere.” Of Mr Bethel’s position, he added: “That’s a typical reaction. It’s not going to drive things, take the bull by the horns and make a decision to alleviate the situation, be progressive and stay in financial services.

“Every day since 200, the first blacklisting, they’ve [the EU and OECD] been eating away at financial services. Here we are 21 years later. They’ll be back. There’s no escape my brother. We’re really missing the opportunity here to put something down for ourselves as opposed to being forced to do it, which will be unsustainable for us to do.

“The writing’s been on the wall for us. We put our heads in the sand and then capitulate, and capitulation will come at our own detriment in the end when there will be no financial services industry.”

While some have argued that a low-rate corporate income tax will scare away financial services clients by overturning the industry’s long-established business model, Mr Moss argued it will “have the opposite effect”.

“It can drive clients to The Bahamas,” he told this newspaper. “There will be more transparency and openness, and people will want to be in The Bahamas as a jurisdiction. It will not run people; it will attract people. This is not a bogeyman; this is tax competition. It will bring the transparency we have been aiming at.”