The peer review process planned for next month by the Organisation for Economic Co-operation and Development (OECD) will be deferred until The Bahamas enters into bilateral or multilateral tax treaties, Deputy Prime Minister and Minister of Finance Peter Turnquest told Guardian Business yesterday, after it was revealed that this peer review is a “top priority” for the global financial watchdog’s base erosion and profit shifting (BEPS) initiative.
Turnquest explained that because The Bahamas has yet to enter into any tax treaties on “income and/or capital” it cannot involve itself in any disputes related to the BEPS initiative.
“The review of the implementation of the Action 14 minimum standard would be pointless, which is the reason why they are asking us to confirm before launching the process in August,” Turnquest said.
“BEPS Action 14 relates to dispute resolution mechanisms available in tax treaties through which competent authorities of the contracting states may resolve differences or difficulties regarding the interpretation or the application of the convention on a mutually-agreed basis. This mechanism – the mutual agreement procedure (MAP) – is the focus of BEPS Action 14, and the purpose of the latter was to develop solutions to address obstacles that prevent countries from resolving treaty-related disputes under MAP.”
Turnquest said the government does not anticipate any negative action from the OECD because of the deferral.
The OECD’s assessment schedule includes a footnote on The Bahamas that states, “If Turks and Caicos Islands and The Bahamas do not have any tax treaties by August 2019, their peer review will be deferred.”
“The Mutual Agreement Procedure (MAP) peer review and monitoring process under Action 14 of the BEPS Action Plan was launched in December 2016, with the peer review process of the first eight batches now well underway,” an OECD release states.
“The peer review process is conducted in two stages. Under stage one, implementation of the Action 14 minimum standard is evaluated for Inclusive Framework members according to the schedule of reviews. Stage two focuses on monitoring the follow-up of any recommendations resulting from jurisdictions’ stage one report.
“The OECD is now gathering input for the stage one peer reviews of Andorra, Anguilla, The Bahamas, Bermuda, British Virgin Islands, Cayman Islands, Faroe Islands, Macau (China), Morocco and Tunisia, and invites taxpayers to submit input on specific issues relating to access to MAP, clarity and availability of MAP guidance and the timely implementation of MAP agreements for each of these jurisdictions using the taxpayer input questionnaire,” notes the OECD release.
BEPS was one of those initiatives the Bahamian government scrambled to come into compliance with in order to avoid being greylisted or blacklisted.