The Tribune

By NEIL HARTNELL

and YOURI KEMP

Tribune Business Reporters

The Bahamas “must get back to growing financial services”, an accountant argued last night, adding that a strong regulatory regime is “the best defence” to Pandora Papers-style attacks.

Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez managing partner, told Tribune Business that leaks and disclosures such as those occurring this week will continue as high-tax nations seek to recover tax dollars they believe are being lost to international financial centres (IFCs) such as The Bahamas.

While The Bahamas has yet to figure prominently in the Pandora Papers disclosures, co-ordinated by the International Consortium of Investigative Journalists (ICIJ), he warned it was presently impossible to determine whether this nation will escape any reputational damage because there are more leaks to come.

“The Bahamas has not really been mentioned in the preliminary announcements, and we hope The Bahamas is unscathed by any of this, not only by mere coincidence but because we have a very steely jurisdiction in the type of clients we take on and the the type of business we attract,” Mr Gomez told this newspaper.

“We go through all the anti-money laundering and compliance procedures agreed between our jurisdiction and leading law enforcement agencies around the world. I don’t expect The Bahamas to feature heavily in this, but it serves as a reminder the journey continues. We must continue to be vigilant, and ensure our jurisdiction is viewed favourably by regulatory and compliance authorities around the world.”

Referring to the Pandora Papers, billed as a leak of information from 14 different offshore financial services providers that features 11.9m files, including more than six million documents, Mr Gomez warned: “The reality is this is going to continue and continue. Jurisdictions around the world will continue to seek to recoup taxes from individuals and companies.

“This is a journey that will continue, so for The Bahamas we must remain vigilant in the type of business our jurisdiction attracts.” The Baker Tilly chief said it was frustrating that foreign media and tax activists still view The Bahamas and Caribbean IFCs “as places that attract unscrupulous tax dodgers” while never giving any credit for the regulatory reforms already enacted to combat this.

“That is a stigma we are going to continue to have to fight,” Mr Gomez told Tribune Business, “but as long as we remove ourselves from the [black]lists they create it will serve us well to maintain our anti-money laundering regime. That is the best form of defence.

“We have been compliant and will be compliant, and want to attract quality business to the jurisdiction. We need to get back to the business of growing financial services domestically and internationally. That’s our focus and we have to get on with business that is compliant. That’s all it is.”

Mr Gomez added that one potential benefit for The Bahamas was the light shone on US states such as Delaware, South Dakota and Nevada by the Pandora Papers, exposing them as less-regulated, more secretive IFCs that have both pinched this nation’s business and that of other IFCs.

While the full ICIJ leak has yet to be published, The Bahamas was thus far mentioned in relation to the former Dominican Republic vice-president, Carlos Morales Troncoso, and his family who were said to have shifted their assets from this nation to South Dakota in the US after the Register of Beneficial Ownership Act was created in 2018.

That Act forced all financial services providers, registered agents and those entities without a registered office to supply beneficial ownership information on every Bahamas corporate vehicle to a central government database that is off-Internet. Only law enforcement agencies and regulators will have access to the information.

And, as the world comes to grips with the Pandora papers, international media reports yesterday suggested that the Organisation for Economic Co-Operation and Development (OECD) will on Friday unveil a “landmark agreement” on the proposed 15 percent minimum global corporate tax rate that some 140 countries are expected to sign on to.

It is unclear whether The Bahamas will be one of them, as this is a decision the Davis administration will now have to make. The reports suggested the agreement is to be implemented by 2023. It may create some benefits for The Bahamas, as new taxing rights will enable countries to gain a slice of the profits generated by multinationals based on the sales they make within a state’s borders.

The Bahamas, with its focus on private wealth management, is also likely to be less impacted by an initiative some said would only impact around 100 of the largest multinationals and contain exemptions for banks and natural resources companies.

Mr Gomez last night agreed that the multinational focus was “not a major concern for The Bahamas” as it presently attracts little to none of this business, although the country will still have to comply with whatever agreements flow from the OECD.

Yet he added: “We want to attract multinationals, not for tax reasons, but to grow our economy. We want to put the pressure on the Government to start attracting multinationals, but not for the reasons outlined by the Pandora Papers.

“Rather it is to grow our economy, and legitimately increase the tax base in the country, which is property tax, VAT and Stamp Tax etc. That will be a wonderful way to start our return to a better GDP.”

The attorney general also yesterday renewed calls for a “level playing field” in international financial services following the so-called Pandora Papers leak.

Senator Ryan Pinder said: “We’re working hard as a small jurisdiction with limited resources and limited technical abilities, just like a lot of our regional partners, in meeting the requirements and the expectations of the international community. You’ve seen we have worked hard and, in many cases, to the detriment of our industry. We have worked to be compliant.”

He added: “I do note that in the Pandora Papers, for the first time in any of these public releases, that larger countries have been identified as being culprits with respect to these financial matters.

“We look to advance the jurisdiction in financial services. I have had meetings with the industry represented by the Bahamas Financial Services Board (BFSB), with the regulators as well as my colleague ministers, who are involved in the portfolio.

“We are committed to having The Bahamas be respected and compliant with international best practices. But, unlike the former administration, we’re also committed to advancing new policies, new products, new offerings for the jurisdiction so we can see parallel growth as we comply with the regulatory obligations that are imposed upon us.”