The Organisation for Economic Co-operation and Development’s (OECD) global minimum 15 percent corporate tax is not on the front burner of the government’s agenda at the moment, Attorney General Ryan Pinder said yesterday.
The OECD announced over the weekend that 136 of its 140 member jurisdictions have agreed to the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting to reform the global taxation system, which calls for the implementation of a minimum corporate tax at 15 percent.
Pinder said although the previous administration agreed in principal to support the proposal, the new Davis administration needs to review precisely what The Bahamas has committed to.
“I think the prior administration had indicated to the OECD they were supportive of it. We’re reviewing it now and reviewing the different protocols. You would see that there are different thresholds on revenue and its applicability on the different companies that may be doing business in The Bahamas. Given those thresholds, I think forcing our domestic economy into a corporate income tax is not there,” he told Guardian Business before the weekly Cabinet meeting.
“Most, if not all, of our companies are below those revenue thresholds, so it’s really a multinational type of income tax. So we’ll be taking a look at it – if it’s something we should pursue and what the best way to implement it is, but right now I don’t see the OECD’s program as one that would affect the day-to-day businesses of The Bahamas. We’re reviewing our commitments and the protocols right now. I don’t see this as a front burner item right now.”
The Inclusive Framework includes the Two-Pillar Solution to Address the Tax Challenges Arising From the Digitalisation of the Economy. It is expected to be delivered to the G20 Finance Ministers and Central Bank Governors Meeting in Washington DC today, October 13.
Under the framework, countries are tasked with signing a multilateral convention next year and have necessary legislation in place for implementation in 2023.
The OECD and other global financial watchdogs have tried to rein in small offshore financial centers like The Bahamas that have zero or very low corporate taxes, leading to continued sanctions and “blacklistings”.
The OECD maintained that developing countries would be on equal footing under the new framework and the Two-Pillar solution contains a number of features to ensure that the concerns of low-capacity countries are addressed.