The Organisation for Economic Co-operation and Development (OECD) has concluded that The Bahamas is a safe place for financial services and corporate investment activities, a press release from the Ministry of Finance revealed, explaining that the country’s domestic legal framework is in line with international standards.
Deputy Prime Minister and Minister of Finance Peter Turnquest revealed the OECD’s findings on the floor of the House of Assembly yesterday, where he contended that the government’s hard work in implementing legislation and regulatory reforms has paid off.
“Our commitment to the enhancement of transparency mechanisms demonstrates yet again that The Bahamas will not be a jurisdiction that encourages or facilitates financial crimes, including tax evasion and money laundering,” Turnquest said.
“This confirmation affirms The Bahamas as a premier partner in the global fight against harmful tax practices.”
The ministry’s press release explained that last week the OECD’s Forum on Harmful Tax Practices (FHTP), through the Base Erosion and Profit Shifting (BEPS) Inclusive Framework, approved the country’s latest peer review, which was conducted in Paris in June.
Turnquest explained that next year the OECD will review The Bahamas’ implementation of related legislation and its effectiveness. He added that the Ministry of Finance will now also ensure that all participants in the financial services sector are doing their part to remain in “full compliance with all the provisions of law”.
The release continued: “The FHTP assessment concluded that the domestic legal framework of The Bahamas was not harmful to the international substantial activities requirement standard. The standard requires that jurisdictions have legislation in line with the BEPS Action 5 minimum standard which identifies geographically mobile activities, such as financial services, and that the core income generating activities must be conducted with an adequate amount of qualified employees and operating expenses within the jurisdiction.”
At the end of 2018 the government enacted the Commercial Entities (Substance Requirements) Act, 2018 which addressed the European Union’s concern that The Bahamas was “providing a commercial environment with no or low effective tax rates on income, which attracted investments through corporate vehicles which had no substantial economic presence and which did not engage in real economic activity within the jurisdiction”.
“The EU’s assessment of The Bahamas’ substance legislation was conducted in March 2019 and was the basis for the EU to determine that The Bahamas should not be included on the List of Non-Cooperative Jurisdictions for Tax Purposes which was published that same month,” the release states.