(CMC) – The Bahamas government said it is “disappointed” that the European Union (EU) is moving to name the Caribbean Community (CARICOM) country as a tax haven later this week.
Finance Minister, K Peter Turnquest, who is also the Deputy Prime Minister said that Nassau has learnt that the EU Code of Conduct Group (COCG) will be making a recommendation to the Council of the European Union this week to include The Bahamas on the EU List of non-cooperative jurisdictions for tax purposes.
“Throughout this process, The Bahamas has consistently been engaged with the OECD (Organisation of Economic Cooperation and Development) and the COCG on the EU listing criteria – including as late as last week. Therefore, this latest move is particularly surprising to us,” Turnquest said in a statement.
Last week, international media reports indicated that St Lucia will join its Caribbean neighbours Barbados and Grenada in being removed from a list of tax havens drawn up by the EU.
The Reuters news agency said it had seen an EC document indicating that Bahrain, the Marshall Islands and St Lucia will be removed from the list last week.
It said that the latest decision was taken by the EU Code of Conduct Group, which includes tax experts from the 28 member states.
The EU finance ministers are expected to endorse the proposal at their regular monthly meeting in Brussels on March 13.
Earlier this month, the CARICOM leaders who met in Haiti for the 29th inter-sessional summit, called on their finance ministers and central bank governors of the region to meet “expeditiously” to consider new proposals as regional governments continue to react to decisions by Europe in listing some countries as tax havens.
The communique issued at the end of the summit noted that the proposals on a CARICOM Strategy had been prepared by a CARICOM Technical Working Group.
Trinidad and Tobago Prime Minister Dr Keith Rowley, whose country remains the only Caribbean nation on the EU black list, told reporters that the regional countries were being “threatened” by the unilateral decision of the European Union to “blacklist” several islands even as the region has tried to comply with the necessary legislative requirements.
According to the communique, regional leaders “deplored” the significant reputational damage inflicted on member states from their inclusion in the list of ‘non-cooperative tax jurisdictions’ published by the European Union Council in December 2017 as well as other unilateral processes which label member states as ‘tax havens”.
The three countries to be de-listed this week are reported to have made “specific commitments” to adapt their tax rules and practices to EU standards, according to the EU document.
All delisted countries have been moved to a “grey list”, which includes dozens of jurisdictions that are not in line with EU standards against tax avoidance but have committed to change their rules and practices.
In his statement, Turnquest said that in December last year, the Bahamas signed onto the Inclusive Framework for the implementation of the Base Erosion Profit Shifting (BEPS) initiative with the OECD. This solidified our international commitment to comply with measures to avoid tax planning strategies used by multinational companies to exploit gaps and mismatches in tax rules to artificially shift profits to jurisdictions where there is low, or no actual economic activity.
As of March 2018, a total of 113 countries and territories have joined the BEPS inclusive framework.
“The Bahamas has taken immediate steps to reiterate its commitment to the European Commission with respect to the non-facilitation of offshore structures and arrangements in the jurisdiction aimed at attracting profits without real economic substance for the purpose of profit shifting.
“Legislation is currently being drafted to give effect to the implementation of the BEPS minimum standards and to address gaps in our current regulatory regime identified by the COCG. We anticipate that this legislation will be laid in the House of Assembly by April 2018.”
Turnquest said that discussions have been held with the Secretary General of the COCG responding to their specific concerns, followed by formal letter.
“We believe the discussions were positive and remain hopeful that our efforts to address their concerns will result in the favourable consideration of The Bahamas as a cooperative tax jurisdiction.
“We will continue to demonstrate our commitment to international regulatory standards and initiatives thereby ensuring that the Bahamas remains a clean, compliant and cooperative jurisdiction,” he added.