The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government’s growing optimism that The Bahamas will imminently escape the European Union’s (EU) tax blacklist appeared justified yesterday amid reports this nation is among those set for delisting.

The Law360.com website, citing multiple unnamed sources, named this nation as one of four - also including Turks & Caicos, Belize and Seychelles - that will be removed from the 27-country bloc’s list of allegedly non-cooperative jurisdictions for tax purposes when it conducts its latest review of the initiative before February’s end.

While there has been no official confirmation from Brussels that The Bahamas will be removed, the reports follow similar past patterns where EU officials have leaked the outcome to selected journalists about a week in advance of the decision being confirmed.

Michael Halkitis, minister of economic affairs, last week signalled The Bahamas could escape the blacklist within weeks after it received a “passing mark” over a key issue that prevented its removal in late 2023.

He added that The Bahamas had received a “satisfactory” rating for its exchange of economic substance information from the Organisation for Economic Co-Operation and Development (OECD) arm that assesses each country’s compliance on the issue.

The OECD’s forum for harmful tax practices has now “communicated” its findings on The Bahamas to the EU’s Code of Conduct group, which determines which nations are included, remain on or are delisted from the 27-nation bloc’s tax non-cooperation blacklist.

The EU’s assessments take their cue from, or are largely governed, by the findings and recommendations from the OECD’s forum on harmful tax practices. Mr Halkitis hinted at the Government’s optimism, now that its exchange of economic substance information has made the grade, that The Bahamas will escape the EU blacklist after it is reviewed by the Code of Conduct group later this month.

Speaking at the Prime Minister’s Office’s weekly press briefing Mr Halkitis said The Bahamas’ upgraded and reformed economic substance report- ing portal was completed in December, paving the way for this nation to meet the OECD forum’s information exchange standards.

He added: “One of the issues that prevented us from coming off the black- list last year was being able to exchange information. You might recall that we had an issue with the portal that we were using, which was not adequate. We had to replace it.

“At the end of December, we were able to have in place a portal that enabled us to do the exchanges; to exchange all the information with those countries that wanted to exchange with us. The group that oversees that process is something called the forum on harmful tax practices. Early in January, they looked at the changes that we made and gave us a passing mark of, yes, that’s satisfactory.”

Mr Halkitis said the OECD forum has relayed these findings to the EU Code of Conduct Group, and the Government is now hopeful for a “positive outcome” as it relates to The Bahamas being removed from the blacklist when the EU meets at the end of the month.

The EU blacklisted The Bahamas in October 2022 because it did not correct deficiencies in its economic substance reporting regime. This relates to the Commercial Entities (Substance Requirements) Act 2018, which requires companies conducting “relevant activities” to confirm they are carrying out real business in The Bahamas via annual electronic filings.

These companies must show they are doing real, legitimate business in a jurisdiction and are not merely brass plate, letterbox fronting entities acting to shield taxable assets and wealth from their home country authorities.

“The Bahamas facilitates offshore structures and arrangements aimed at attracting profits without real economic substance by failing to take all necessary actions to ensure the effective implementation of substance requirements,” the EU’s February 14, 2023, summary concluded.

He said: “On the 7 [of February] they then communicated that information to another committee called the Code of Conduct Group of the EU. They had a meeting on February 7, which is last Wednesday. And so they got the information that we have dealt with that one outstanding matter.

“There is a meeting of the EU on February 20, which is the Tuesday after next, where they will take all of that into consideration. So we are hopeful that with all of these positive reviews, we can get a positive outcome.”