Reporting requirements outlined in Commercial Entities Act amendments
In a move to avoid another European Union (EU) blacklisting regarding tax matters, the government yesterday tabled the long-awaited amendments to the Commercial Entities Act, 2018.
Top among the amendments in the Commercial Entities (Substance Requirements) (Amendment) Bill, 2019 are those regarding reporting requirements which stipulate that all reporting take place within nine months of the fiscal year end in a specified manner; and that entities that are centrally managed and controlled, and claim to have tax residence in a jurisdiction outside of The Bahamas report on its compliance with the act within the specified timeframe, and append to its annual report evidence that it is registered and compliant with tax requirements in that jurisdiction.
“Any entity which fails to report to the authority in accordance with this section shall be liable to an administrative penalty or removal from the applicable register,” the bill notes.
In addition to clarifying various definitions in the bill, the Commercial Entities Amendment Bill, 2019 repeals and replaces section 6 of the act, which deals with outsourcing core income-generating activities of commercial, regulated and non-included entities.
It stipulates that no included entity shall outsource any of its core income-generating activities to an entity or person outside of The Bahamas, unless the entity is able to demonstrate supervision and control of the outsourcing service provider.
“The resources of the outsourcing service provider conducting outsourced core income-generating activities in The Bahamas on behalf of the included entity must not be counted multiple times in respect of outsourced core income generating activities services to multiple included entities,” the bill notes.
The amendment also repeals and replaces section eight of the act regarding reduced substance requirements for holding companies, stipulating that such entities shall comply with all applicable laws and regulations of The Bahamas and have adequate human resources and premises in The Bahamas for holding and managing equity participation in other entities.
The amendments follow the latest round of high-level discussions between senior government officials and the European Commission, and take into account feedback received from the commission following an assessment of the legislation passed in December 2018.
In a statement earlier this week, the government said the amendments reinforce its intent to take all necessary steps to safeguard the financial services sector and maintain the industry’s competitive edge, and ensure the removal of The Bahamas from all watchlists in the shortest timeframe possible.
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