The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent QC says “there is no basis” to assume the Bahamas will miss its automatic tax information commitments, as the OECD’s ‘unofficial spokesman’ poured scorn on his suggestion that the country find 50-60 exchange partners prior to 2018.

Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, told Tribune Business that “the most eloquent and effective response” to the Bahamas’ critics was full Common Reporting Standard (CRS) implementation by 2018.

Calling for the Government to “prioritise” passage of the legislation that will facilitate automatic tax information exchange, Mr Moree said the Bahamas’ CRS implementation had to be “fully compliant” with every aspect of the OECD’s guidelines.

The well-known QC and others believe that meeting all its commitments and timelines for implementing the CRS, the global exchange standard, give the Bahamas the best possible defence against the recent OECD-inspired media onslaught against this nation’s financial services industry.

However, a leading OECD ‘surrogate’ derided Mr Moree’s call for the Bahamas to have signed 50-60 bilateral information exchange treaties with partner countries prior to this nation’s 2018 implementation of the CRS.

Mark Morris, the ‘independent tax expert’, who has been quoted in many of the media articles that formed the recent anti-Bahamas offensive, described this as a “losing chess game”.

“What a terrible idea,” he said in an e-mail to Tribune Business, responding to Mr Moree’s proposal.

“The Bahamas signing even 70 agreements won’t be acceptable unless the Bahamas signs with all LATAM (Latin American) countries that have committed to the CRS.”

Mr Morris’ demand for the Bahamas to agree automatic tax information exchange agreements with major Latin American countries appears to stem from this nation’s recent pursuit of business from markets such as Brazil and Mexico.

“The Bahamas even acknowledges the focus of their business in the last few years is Latin America,” he added.

“So signing agreements with EU (European Union), Asia, etc, and omitting LATAM, won’t be effective. This is not a chess game. Even if it were, Bahamas is an amateurish player.”

Mr Morris, who touts his close ties to members of the OECD’s Global Tax Transparency Forum on his website, appears to be saying things that the organisation’s executives would like to say publicly, but cannot be seen doing so.

The motives behind the anti-Bahamas offensive by the Organisation for Economic Co-Operation and Development (OECD), which acts for the G-20 group of the world’s most powerful nations, are unclear.

On the surface, the OECD and its supporters appear to be trying to force, or ‘bounce’, the Bahamas into abandoning its bilateral approach for complying with the global CRS standard.

This allows the Bahamas to negotiate automatic tax information exchange with all countries that approach it, or that it seeks out, rather than the OECD’s preferred multilateral route, which would require this nation to deal with ‘all-comers’.

Some in the Bahamian financial services sector believe that the OECD is having second thoughts, and now feels it has made a mistake, in allowing countries to choose between the bilateral and multilateral routes, even though the likes of Hong Kong and Singapore have followed the Bahamas in selecting the former.

Others believe the OECD is determined to make an example of the Bahamas, which is more exposed than the ‘protected’ UK Crown dependencies and likes of Hong Kong, as way to deter others from switching from the multilateral to bilateral implementation approach.

And Pascal Saint-Amans, the OECD’s tax policy chief, broke cover earlier this week to express doubts that the Bahamas will deliver on its CRS implementation obligations, while warning of a potential 2017 ‘blacklisting’ for this nation.

Mr Moree, though, argued that there was no justification for Mr Saint-Amans and the OECD to pre-judge the situation, and simply assume that the Bahamas was not going to deliver on its CRS commitments.

“There is no basis for the OECD to assume that the Bahamas is going to be unable to meet its commitments,” he told Tribune Business. “The history would suggest otherwise; quite the contrary.

“When the Bahamas has been given external mandates with regard to the financial services industry, we have consistently met those mandates, the most recent being FATCA with the US.”

Mr Moree said he “preferred to regard the recent comments by the OECD as an incentive for the Bahamas to focus on its CRS implementation plan.

“In that regard, the imperative for the Bahamas is that the implementation process for CRS must be fully compliant with the OECD guidelines in every material respect,” he added.

“Transparent, focused, efficient, disciplined, proactive and based on measurable timelines to ensure that we can commence the exchange of information in 2018.

“The ultimate vindication of the Bahamas in this process will be the timely, efficient implementation of CRS. That is what the Bahamas must focus on, and it will be the most eloquent and effective response to what appears to be a campaign in certain quarters to convince the Bahamas to move from its bilateral approach to a multilateral approach.”

Mr Moree urged the Government to publish timelines/schedules that would both allow the Bahamas to measure its progress, plus permit the OECD and other international bodies to do likewise.

He called on it to publish timelines for when the legislation, and accompanying regulations, guidance notes and other agreements, would be issued for circulation, brought to Parliament, and passed into law.

“It is extremely important that the Government give this legislation priority attention on its legislative agenda,” Mr Moree told Tribune Business. “In my view, the Act needs to be passed, and the regulations promulgated, certainly by the end of November, if not the end of the year.”

He added that the Bahamas also needed to implement all four CRS stages “concurrently, not sequentially”, as there was insufficient time to do the latter.

“It means we must multi-task, and do all the things we need to do at once,” Mr Moree said.

“All I ask of the OECD, and the international community is to recognise our compliance if the Bahamas delivers on its commitments. Therefore, the question of blacklisting and sanctions does not arise.

“All this inflammatory rhetoric and pejorative language should give way to a more conciliatory exchange between the OECD and the Bahamas, recognising we are a responsible, first tier financial centre which is substantially, if not wholly, compliant.”