Bahamas Financial Services Board (BFSB) President Tanya McCartney said yesterday there has been advocacy within the sector to develop an attractive, low territorial tax system to once and for all lift the veil over The Bahamas that it is a harmful tax jurisdiction.
Although The Bahamas has business license fees, there have long been calls for the implementation of a corporate or personal income tax system to ease the heavy hand of international financial services regulators.
The absence of such taxes has led to The Bahamas being continually labeled as an offshore tax haven, a stigma which McCartney said the BFSB has been working hard to detach The Bahamas from.
And with European Union (EU) Members of Parliament looking to formalize a new process for establishing tax haven blacklists by the end of this year, McCartney said the industry and government should look toward making this reform of the tax system a priority.
“The Bahamas continues to be plagued by a perception of being high risk and being a harmful tax jurisdiction. Our brand continues to take a hit in that regard, so the first thing I think we need to do is look at ways to remove that veil from over The Bahamas. The first step I would suggest would be that we look at a review of our tax system. I will put that out there. I would say that the impact of the various transparency initiatives forces us to take a long, hard look at whether our current tax system best serves the international financial services sector and by extension our economy,” she said while appearing as a guest on the Guardian Radio talk show “Z Live”.
“The positioning of The Bahamas as a mid-shore jurisdiction, I think that is what we need to look at and some of my members through the BFSB continue to advocate for that, which would be a favorable or attractive low territorial tax system. They have them in jurisdictions such as Singapore, Hong Kong and Ireland just to name a few. So we need to take a good look at our tax system and make that a priority.”
Last month the European Parliament adopted a resolution that all jurisdictions with a zero percent corporate tax rate, or with no taxes on companies’ profits, should be automatically placed on a blacklist.
The Bahamas was removed from the EU’s List of Non-Cooperative Jurisdictions for Tax Purposes in February 2020. However, Chairman of the European Parliament Subcommittee on Tax Matters Paul Tang argued last month that The Bahamas, among other jurisdictions, should not have been removed for just making “simple tweaks to the tax systems”.
“The EU did not clip their words. One of the newspapers printed last year that the EU would keep their foot on our neck as long as we maintain the current position. And more recently we saw a statement that the EU MPs were of the view that jurisdictions that were no tax or low tax jurisdictions should not be removed from their tax blacklist. And so that pressure remains and we need to look at it, have a discussion and see what the options are, so that we can get it behind us and focus on the opportunities that present themselves for the sector,” McCartney said.