The Bahamas signed the Convention on Mutual Administrative Assistance in Tax Matters (“the Convention”) on Friday, December 15, 2017. The Convention was signed at OECD headquarters in Paris, France by Peter Turnquest, Deputy Prime Minister and Minister of Finance, who was accompanied by Brent Symonette, Minister of Financial Services, Trade and Industry and Immigration, and LaTonia Symonette-Tinker, Consultant, Ministry of Financial Services.
The Bahamas is the 116th jurisdiction to sign the Convention.
The Convention will be applicable for the exchange of information in tax matters in accordance with the rules of the convention and the corresponding instruments for implementation signed between participating countries. The Bahamas will begin exchanges as of September 2018.
Signing the Convention is one of three major steps taken by The Bahamas, recently, to strengthen its international tax cooperation assistance, to comply with international regulatory commitments and to increase transparency. The other is the signing of the Multilateral Competent Authority Agreement, which is the instrument that allows for the exchange of financial account information between the Competent Authorities of partner countries under the Convention, which took place on Wednesday, December 13 in San Marino, Italy.
The Competent Authority of The Bahamas is the Ministry of Finance. And the last is The Bahamas making a formal commitment to join the Base Erosion and Profit Shifting (BEPS) initiative by becoming a member of its inclusive framework. BEPS refers to tax planning strategies that corporations use to exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity.
Deputy Prime Minister Turnquest said, “Signing the Convention sends a strong message to the international community that The Bahamas is committed to working with our international partners in adhering to international standards for tax co-operation. We will no longer play catch up and risk being blacklisted, we will be the standard setters for international financial centers.”
The Convention was first developed as an OECD-Council of Europe agreement in 1988. It was amended by Protocol and opened to non-members in 2010. The Convention is the most comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance.
The Convention was amended to respond to the call of the G20 at its 2009 London Summit to align it to the international standard on exchange of information on request and to open it to all countries, in particular, to ensure that developing countries could benefit from the new more transparent environment. The Convention has gained popularity in being accepted as the international agreement for bilateral tax cooperation among its signatories.
Symonette said, “This week of events in the financial services industry of The Bahamas, further demonstrates the efforts of the government to properly regulate, stabilize and stimulate the Bahamian economy. We cannot stop now, this is the beginning of many changes to come to improve not only our reputation as a financial centre, but also the quality and efficiency of services we provide.”
The Bahamas must now ready itself as new international regulatory standards begin to unfold. Financial Institutions can be assured that the government will remain a compliant jurisdiction for legitimate business.
“We must be consistent in the fight against financial crime and other illicit activity in the enforcement of financial services regulation. We are turning a new page in financial services and the way we do business in The Bahamas. We will ensure efficiency and affordability in the ease of doing business for domestic and international clients, as we do all that is necessary to sustain and grow the financial services sector and protect the economy of The Bahamas.”