The Bahamas cannot continue as a non-taxing jurisdiction and must use the imminent global tax structure changes to attract business to The Bahamas, former Minister of Finance Peter Turnquest said yesterday.
Making his contribution to the budget debate, Turnquest said there is no reason for the Bahamas’ financial services sector to be immediately fearful of the global minimum tax initiative proposed by the G7 group of nations.
He contended though that the days of the so-called tax haven are coming to an end.
“Firstly, let me say that I believe there is no reason for us to be alarmed, as the G7 statement issued is one of general agreement on an intention that still requires tremendous work and sign-off by the entire G20, after which, technicalities and time lines will have to be worked out,” said Turnquest.
“Make no mistake however, that no matter how the final agreement ends up, it is likely to have some impact on The Bahamas and our international taxing obligations, if not domestic.
“For those who continue to hold their heads in the sand believing that we will be able to continue as a non-taxing jurisdiction, I would only remind them that bank secrecy was also at one time an untouchable subject that has gone the way of the dodo bird.
“We need to adapt and develop strategies to get ahead of these developments and exploit the opportunities that can be derived as a cooperating and globally compliant jurisdiction.”
As a means of benefiting from the tax initiative, Turnquest said The Bahamas, like other nations, should begin to tax digital services that are not right now taxed.
Turnquest was talking about entities like Facebook, which was supposed to begin to remit value-added tax on Facebook ads purchased by Bahamians, though he declined to mention company names.
“If we were to assert our taxing rights over these transactions, it would represent new revenue,” he said.
“So as not to be too controversial on this matter today, I will not give specific examples of areas that may be subject to such a tax, but consider all of the service providers that provide services to Bahamian entities or consumers delivered in The Bahamas.”
Turnquest said this country should take advantage of the proposed minimum global corporate income tax of 15 percent by modernizing the country’s existing corporate tax structure and use the change to attract multinational corporations to this jurisdiction.
“With such a globally accepted minimum, The Bahamas could put itself in the game to attract large multinational corporations that are currently domiciled afar due to tax treaties,” said Turnquest.
“We are close, enjoy dollar parity, stability and a common business language, why not The Bahamas?
“I know this is a touchy subject for some of us, so I will leave it there, but I encourage everyone to see the glass half full and reimagine the opportunities these developments can potentially bring, instead of the potential losses, which invariably will come anyway if we do nothing.”