Minister of Financial Services, Trade and Industry and Immigration Elsworth Johnson yesterday said the government has made substantive progress toward starting the issuance of tax residency certificates (TRC) for permanent residents.
The country’s lack of such certificates, which would clarify the tax status of individuals who want to be considered residents in The Bahamas for tax purposes, has been a bone of contention for international financial services regulators like the Organization for Economic Cooperation and Development (OECD).
“I am happy to inform you that we have begun making substantive progress on tax residency
certificate legislation, working closely with the Law Reform Commission in the Office of the Attorney General,” Johnson said while speaking during the Ministry of Financial Services, Trade and Industry and Immigration’s virtual symposium yesterday.
“The issue of residency is an important matter given global developments on tax transparency. The OECD released its Standard for Automatic Exchange of Financial Account Information, which has a self-certification process for establishing residency for tax purposes, as the basis of information sharing. In this regard, the concept of ‘residency’” and specifically ‘tax residency’ in The Bahamas has to be carefully defined, especially if The Bahamas is to remain progressive and ahead of the changing global dynamics in international financial services.”
The Minnis administration began considering permanent resident tax certificates shortly after it came to power in 2017, under former Minister of Financial Services, Trade and Industry and Immigration Brent Symonette.
Last May, Symonette said the permanent residency certificate would require the holder to spend a minimum of 90 days – not necessarily consecutively – and can spend no more than 183 days in one other country.
Yesterday Johnson revealed further details, including that the tax residency certificate will be issued with a unique National Insurance Board (NIB) TRC number.
“To be eligible for a tax residency certificate, the resident must pay the relevant fees and make an annual payment towards the National Insurance Board at the rate and maximum wage ceiling for that particular year, or be subject to another applicable tax,” he said.
“We have received proposals from industry, the benchmarking has been completed and we are working closely with BFSB (Bahamas Financial Services Board) and their legal policy committee. Updates on this are forthcoming.”
The Bahamas, before the introduction of this tax certificate, would have had no way for a person to prove their tax status in another country, so as to not suffer taxation in more than one country.
The OECD and other international financial services watchdogs have been cracking down on international financial centers like The Bahamas in order to ensure citizens of countries that are members of these international organizations pay taxes.