The Tribune

By KHRISNA RUSSELL

Deputy Chief Reporter

krussell@tribunmedia.net

EXUMA and Ragged Island MP Chester Cooper suggested yesterday the Minnis administration played politics when it came to the possibility of The Bahamas being blacklisted by the European Union as a non-cooperative tax jurisdiction.

This threat, he said, came as a surprise to the Progressive Liberal Party, adding the party is open to consultation with the government and would agree to pass emergency legislation if required to respond to what he called an “attack”.

Finance Minister K Peter Turnquest, on Friday, confirmed the government had been blindsided by the EU’s decision to blacklist the country for being a tax haven. The decision came despite the country signing on to the inclusive framework for the implementation of the Base Erosion Profit Shifting (BEPS) initiative with the Organisation for Economic Co-operation and Development (OECD).

This move on The Bahamas’ part was to stave off a blacklisting by solidifying an international commitment to comply with measures to avoid tax planning strategies used by multinational companies to exploit gaps and mismatched tax rules to artificially shift profit to jurisdictions where there is low or no actual economic activity.

In December, while addressing the House of Assembly, Prime Minister Dr Hubert Minnis told parliamentarians files showed the OECD in March 2017 wrote to then Prime Minister Perry Christie inviting him to consider The Bahamas applying to join the BEPS initiative.

However, he said the invite remained unanswered, adding it was a “precarious” situation inherited from the previous government. In view of this situation the prime minister at the time said the government responded aggressively.

The Bahamas signed on to the initiative in December.

Nonetheless the country is set to be blacklisted tomorrow when the 28 EU governments are also expected to de-list other nations, CNBC has reported.

“The Progressive Liberal Party, like the minister of finance, is disappointed in this development, if not entirely surprised,” the PLP deputy leader said yesterday. “The government previously assured that it had staved off this move by the EU.

“The shifting goal posts of the Organisation for Economic Cooperation and Development (OECD) and the illusory criteria the EU Code of Conduct Group have imposed without giving The Bahamas any real voice are a threat to our livelihood.

“It is mind-boggling that all that has been done by The Bahamas in recent years is not enough to satisfy these international bodies. But there can be no question that the national interests in the security of The Bahamas’ offshore financial centre are paramount.”

He continued: “The PLP is sincerely interested in helping the government navigate the process of de-listing and will avail ourselves for consultation and to pass emergency legislation if required, to adequately respond to this attack.

“We have a wealth of expertise and have no illusions that de-listing is a national priority to preserve our financial services industry and correspondent banking relationships, which have already suffered enough.

“However, simply achieving the short-term goal of de-listing is not enough, as these international bodies will likely move the goal posts again. What is needed is a proactive course of action and a national non-partisan plan to improve ease of doing business and to create incentives for real international business to create economic substance in The Bahamas.

“Meaningful consultation with industry stakeholders, particularly the Bahamas Financial Services Board, and the opposition on these issues is a must. Waiting for the OECD, and now the EU, to come up with further hoops for us to jump through will not do.”

The MP said the country must have a comprehensive approach to economic growth by generating better financial conditions in which entrepreneurs can thrive.

“As we have previously suggested, a local economic czar, designing more and easier access to banking services, deeper investment in food security through local private public partnerships, local and foreign investment in expanding industries in which more Bahamians can participate and wealth creation are just a few things that can begin immediately to ensure the sound financial future of The Bahamas,” he said.

CNBC reported on Friday, the Bahamas along with the US Virgin Islands and St Kitts and Nevis are set to be added to an EU blacklist of tax havens.

The decision, taken by EU tax experts, is expected to be endorsed by EU finance ministers at a regular monthly meeting on Tuesday, when the 28 EU governments are also expected to de-list Bahrain, the Marshall Islands and Saint Lucia, CNBC said.

As a result of both moves, the news agency said, the blacklist would maintain nine jurisdictions deemed to facilitate tax avoidance. The other six are American Samoa, Guam, Namibia, Palau, Samoa and Trinidad and Tobago.