Symonette: EU in possession of draft Commercial Entities (Substance Requirements) Bill
The European Union (EU) is in possession of The Bahamas’ draft Commercial Entities (Substance Requirements) Bill, which requires foreign firms to have a physical presence and “economic substance” in the jurisdiction, revealed Minister of Financial Services, Trade and Industry and Immigration Brent Symonette on Monday, adding that the December deadline to become completely compliant with the criteria of the EU’s Code of Conduct Group as it relates to base erosion and profit shifting is fast approaching.
The country’s compliance in areas such as the 34 tax exchange agreements signed, adherence to the Foreign Account Tax Compliance Act (FATCA), compliance with Organisation for Economic Cooperation and Development (OECD) rules, and its continuance in moving closer to full compliance with the EU, “send a strong, clear, loud message to the international financial services industry that The Bahamas is serious about its commitment to adhering to international standards”, Symonette said.
The Commercial Entities (Substance Requirements) Bill means international business companies (IBCs) will have to have actual economic substance in this country and are not simply taking advantage of the existing low tax regime The Bahamas affords.
Deputy Prime Minister and Minister of Finance Peter Turnquest said recently that the EU’s call for proof of “substance” in regard to IBCs registered in The Bahamas presents an opportunity to attract more locally domiciled corporations, “if done right”.
The move to place more pressure on international companies to have more of a physical presence in this jurisdiction could also come with additional and more stringent accounting and tax reporting obligations, Turnquest explained in April. While there is worry that ever-changing rules handed down by the EU and the likes of the OECD could cause a decline in business, Turnquest said The Bahamas could take advantage of the situation.
“It will require legislation, but it also presents an opportunity. If done right we may be able to take advantage of the ‘fair competition’ and ‘transparency’ aspects of this development, to boost our home office initiatives and for other MNEs (multinational enterprises) to set up here with real substance, creating real jobs and real activity,” said Turnquest.
Education: Florida International University, BS in Journalism
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