The government is anxiously watching a developing agenda put forth by the Organization for Economic Co-operation and Development (OECD) that would require international financial centers like The Bahamas to enact a minimum tax regime for multinational corporations that do or do not have a substantial presence in the country, Deputy Prime Minister and Minister of Finance Peter Turnquest told Guardian Business yesterday, explaining that the move could force the country to revamp one of its revenue drivers.
The OECD is looking particularly at global business giants like Google, which digitally does business with what is being called “marketing intangibles” in jurisdictions across the world, but does not have a presence, nor pays taxes in those jurisdictions.
The minimum tax regime would force jurisdictions like The Bahamas to further tax multinationals that move some of their profits to this country.
“Yes, we have to be mindful of the agenda item raised by the OECD surrounding minimum global corporate income taxes and how that will be translated to countries like ours that have historically relied upon efficient flat border taxes and more recently, VAT (value-added tax) regimes to fund government programs and services,” Turnquest said.
“As I forecasted almost two years ago, this move has been gathering more support globally, even in the United States, and seems likely to be a true initiative by early next year.
“We will have to continue to monitor developments and evaluate our response to it in the event that it becomes a reality. Some believe the initiative can be beneficial with double taxation treaty features built in, a critical element if the minimum tax is adopted as the global standard; while others see advantage in the current system and want us to hold on to it as long as we can.
“Whatever happens, The Bahamas must be prepared to respond on its own terms, having taken proactive steps based upon sound research and data to give itself the best chance and timeline, should any changes be necessary to reflect global positions.”
International financial centers have long lamented what they call the “shifting goal post” of tax measures from international financial watchdogs like the OECD, as well as the European Union.