The Bahamas was deemed to have met the majority of the elements of the Action 14 Minimum Standard in the just released mutual agreement procedure (MAP) peer review report on making dispute resolution more effective.
Under Action 14, countries have committed to implement a minimum standard to strengthen the effectiveness and efficiency of the MAP, which is a part of the Organization for Economic Co-Operation and Development (OECD) Model Tax Convention, committing countries to work toward resolving disputes related to the interpretation and application of tax treaties.
Pointing out that The Bahamas only has one tax treaty and has no experience with resolving MAP cases, as it has not been involved in any cases, the report notes that the country meets some of the requirements regarding availability and access to MAP under the Action 14 Minimum Standard.
“The Bahamas reported that it has no direct tax system and does not impose income, corporate, capital or other direct taxes. This specific situation makes it unlikely, under its current tax system, that The Bahamas takes an action that results in taxation not in accordance with any tax treaty it has entered into,” states the report, released by the OECD yesterday.
“However, The Bahamas reported that it is ready to resolve tax treaty-related disputes that would arise after an action being taken by its treaty partner.”
Because of this treaty, the OECD recommended that there is no need to modify the treaty The Bahamas has already entered into.
The review period was 2017-2018 and the questionnaires for the peer review process were sent to The Bahamas and its peers on August 30, 2019.
Though there are no domestic remedies, The Bahamas reported that it is ready to resolve tax treaty-related disputes that would arise after an action taken by its treaty partner.
“It provides access to MAP in all eligible cases, although it has, since January 1, 2017, not received any MAP requests. However, The Bahamas does not have in place a documented bilateral notification process for those situations in which its competent authority considers the objection raised by taxpayers in a MAP request as not justified. In addition, The Bahamas has not yet issued MAP guidance but submitted its MAP profile,” the OECD states in the report.
The Bahamas has not yet issued guidance on the governance and administration of the mutual agreement procedure, the report notes.