The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamas needs a ‘value proposition’ “reset” based on physical presence, ‘managing minds’ and substance, a former financial services minister is arguing. Ryan Pinder, now a Graham, Thompson & Company attorney partner, told the International Business and Finance Summit (IBFS): “Our value proposition of financial privacy has all but been eliminated. The Bahamas requires a new value proposition.

“The new value proposition, in my view, is broadening our industry and making the physical presence of business operations and their principals a key focus of our value proposition. The discussion of the establishment of headquarters in the Bahamas, the disclosure requirements for multinational enterprises operating from within the Bahamas, now becomes an important consideration when you redefine our value proposition as a jurisdiction.”

Mr Pinder said the Bahamas has adopted the minimum four out of ‘15 actions’ to meet the Organisation for Economic Co-Operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) initiative. The four actions selected are: (Action 5): Countering Harmful Tax Practices; (Action 6): Treaty Shopping; (Action 13) Transfer Pricing Documentation and Country-by-Country Reporting; and (Action 14) Dispute Resolution. BEPS refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.

Mr Pinder said the underlying principle of ‘transfer pricing’ is that taxation correlates to value creation.

“The more substance and value we can originate from within the Bahamas, the more legitimate an opportunity for multinational companies to base from within the Bahamas because it is a viable jurisdiction that is fully compliant, because we are creating that value here,” he explained.

“The Bahamas is a service jurisdiction. Fintech, IT and other cutting-edge industries are service-based. If we are able to attract the value components of these industries and house them from within the Bahamas; the programming in Fintech; the actual advisory functions in wealth planning; these all offer legitimate opportunities for tax innovation and real savings for these enterprises, and will exponentially expand our economic presence in a cross-border environment.

“We are in a new era of multilateralism. We have to comply, but if we don’t shift what we do and attract in a transparent and compliant world, we will fail.”