The Bahamas’ inclusion in “The State of Tax Justice 2020” report by the Tax Justice Network – for causing $20,975,479 in corporate tax losses to other countries annually – is an indictment on the amount of financial services opportunities the country allows to pass by, while jurisdictions like Barbados and the Cayman Islands contribute billions to the tax losses of other countries through their completely legal financial services products, Managing Consultant of Next Level Solutions Hubert Edwards told Guardian Business yesterday.
Edwards said countries like Barbados and the Cayman Islands, which he said are doing some of the things that The Bahamas had the opportunity to do, are carrying out
“totally legal” financial services business, while being cited by the Tax Justice Network report as causing about $6 billion in corporate tax losses to other countries annually.
“It means that The Bahamas is really outside of the competitive space,” said Edwards.
“They are being blamed for billions of dollars, when we are only being blamed for $20 million.
“If you look at it in the reverse, it means that The Bahamas’ structures are so compliant, that the outturn from everything that is happening is such a small figure. It brings to mind the question ‘why aren’t we being more aggressive when being attacked by the OECD (Organization for Economic Cooperation and Development) and the EU (European Union)?
“We should be able to make the argument that ‘look, here’s a Tax Justice report, there is a $450 billion loss out there and we are only contributing $20 million to that.”
Edwards said if you further drill down in that disparity, of the $58 billion in losses to other countries caused by other international financial centers in the region, The Bahamas is only contributing $20 million to it.
He said this revelation should encourage the country’s financial services industry players to retool the strategy for the industry and re-engage those markets the country lost to Barbados and Cayman years ago.
“I think that requires us to slow down, pause and ask ourselves some fundamental, strategic questions, answer those, then as part and parcel of this economic recovery and building resilience, let’s fix it so that maybe one day we will be on the list with a bigger amount,” Edwards said.
“Of course we still need to pay attention to ensure that even if we’re throwing up big numbers, we’re doing so in a compliant way. That is important going forward.”
According to Edwards, the EU and OECD seem to have forced The Bahamas’ financial services industry into an uncompetitive position, based on the numbers revealed by the Tax Justice Network on this country, versus other jurisdictions.
“Why, therefore, are you always messing with us? Why, therefore, is The Bahamas being treated as a pariah? Why, therefore, are you not making a differentiation between what we do and what other persons do? It seems as if The Bahamas has been pushed, or deliberately rolled into a niche market,” noted Edwards.
“We have to remember that this report is on corporation tax, not income tax. So if and when a report comes out on income tax then we’ll have a true picture of what The Bahamas’ contribution is.
“But even in that regard, for the time being, what it suggests to me, or at least one of the conclusions I will draw, is that The Bahamas is not as competitive in the area of having multinationals locate here with their headquarters and so on and so forth.
“They obviously are locating in Cayman and other places and that is the reason why these countries are throwing up so much more money.”
He said the fact that the country’s not prominent in this particular report is not necessarily a good thing.