The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian financial services industry believes “it is an opportune time” to determine whether this nation should pursue double taxation agreements as a means to attract international business, it was revealed yesterday.

Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business that the industry wanted “a dialogue” over a business model that has been effective in attracting business to jurisdictions such as Barbados.

Asked whether the Bahamas should pursue a ‘low tax’, as opposed to the current ‘no tax’ model, Ms McCartney replied: “Industry is of the view that it is an opportune time for us to have real discussions on DTAs (double taxation agreements).

“This will create a environment for international business in the fullest sense. We need to have dialogue on this so that an informed decision can be made either way.”

Some in the financial services industry, believe the Bahamas should switch to a ‘low tax’, double taxation agreement model on the grounds that this would help it shed the ‘tax haven’ image, and improve perceptions of this nation as a compliant jurisdiction facilitating legitimate business.

Paul Moss, head of Dominion Management Services, has been among the leading proponents of such reforms, arguing that legitimate high net worth and institutional (business and corporate) clients would not object to - and may even want to - pay income-related taxes at low rates in the Bahamas.

Double taxation treaties with other nations would facilitate such business, as they would ensure that companies and individuals were taxed only in the Bahamas - and at lower rates - on profits and capital they wanted to repatriate back home.

Barbados has become the ‘Caribbean jurisdiction of choice’ for Canadian-owned companies, for instance, because its ‘double tax’ agreement with Canada allows their income to be taxed only at its lower rates.

Ms McCartney, meanwhile, said the financial services industry had recommended that the Government expand the qualifying criteria for permanent residency status to investments in Bahamian debt and in endowments that boost education and the environment.

She explained of the proposals: “It presents an opportunity to attract new sources of investments to the country; such as investment in a long-term bond to qualify for permanent residency.

“This bond could pay a lower rate of interest than what we are currently paying on external debt. We can further national development goals by allowing investment in an endowment for the purposes of permanent residency - a substantial endowment to support the roll-out of the University of the Bahamas, or environmental or energy improvements.

“In addition, it will attract new business to the sector if we were able to introduce a class of certified tax residents. Moreover, if we grant permanent residence with a right to work in one’s own business, provided that a prescribed amount of jobs are created and maintained, this would be attractive and help to address the current unemployment levels.”

These proposals have been on the drawing board for at least two years, and Ms McCartney told a Bahamas Institute of Financial Services (BIFS) seminar yesterday: “The private sector in collaboration with the Minister of Financial Services, who is fully engaged, has made recommendations to the Government with respect to these Immigration matters and the need to improve the process.

“We trust that Cabinet will move forward with those recommendations, in the best interest of the financial services sector, for its long-term growth and survival.”

Ms McCartney said the Bahamian financial services industry was “at an extremely critical juncture that coincides with the time line for implementation of automatic exchange of information by 2018”.

She added that it was “imperative that we move expeditiously” to implement this and have legislation passed before the end of 2016, and called for the Bahamas to address Immigration, the ‘ease of doing’ business and create “a business-friendly environment across all sectors” to drive financial services growth.

“As the World Bank survey bears out, we need to be more business friendly,” Ms McCartney told Tribune Business. “We are in agreement with the Bahamas Chamber of Commerce on this.

“If we were able to improve the ease of doing business, it will create an environment for more Bahamian ownership in the financial services sector and attract other investment to the sector.

“Further, the experience of clients and international financial institutions will align with the expectations set when promoting the jurisdiction.”

She added: “We need to fully and effectively embrace the use of technology to achieve this.

“Further we must use technology to innovate service delivery methods for an improved client experience. In addition, we must find ways to create linkages between the large commercial ventures/developments and financial services.

“We also need to review our national brand and ask: What are we known for? What do we want to be known for? How are we perceived, making refinements or improvements where necessary to address this.”