Automatic Exchange of Financial Account Information Amendment Bill, the Automatic Exchange of Financial Account Information Regulations and the International Tax Cooperation Amendment Bill Financial Tax were debated and passed in the House of Assembly on Wednesday (December 6) morning.
Deputy Prime Minister Peter Turnquest, Minister of Finance maintained that The Bahamas remains one of the very few jurisdictions within the region that is not yet compliant with the Organization for Economic Corporation and Development’s (OECD) most recent conventions.
He noted that the passage of the Compendium of Bills would not only affect the country’s financial sector, but ultimately affect all facets of the Bahamian economy as well as citizens and residents throughout the entire Commonwealth.
“Yesterday the Organization for Economic Corporation and Development (OECD) issued its counsel’s conclusions on the European Union’s (EU) list of non-cooperative jurisdictions for tax purposes, a so called ‘blacklist.’
“Notably on the list were several Caribbean countries including Barbados, Grenada, St. Lucia, Trinidad and Tobago, along with Panama and others. In omitting The Bahamas, the OECD did express its sympathy and support to the jurisdictions in the Caribbean region that were severely struck by devastating storms in September 2017, causing casualties and major damage to key infrastructure and holds the view that the screening process should be put on hold for these jurisdictions, Anguilla, Antigua, Barbuda, The Bahamas, the British Virgin Islands, Dominica, St. Kitts, Nevis, Turks and Caicos and others,” Turnquest said.
“The Bahamas has undertaken to implement the OECD global forum new international standards, known as the common reporting international standards for the automatic exchange for financial account information and tax matters, by September 2018.
“For the implementation of the common reporting standards, it requires participating jurisdictions to translate the reporting and due diligence requirements into domestic law, select a legal basis for the exchange of financial account information, have administrative and information technology (IT) infrastructure to collect and exchange information under the standards as well as to have the requisite confidentiality and data safeguards,” added the Minister of Finance.
“Mr. Speaker, at first The Bahamas opted to exchange information using the OECD’s global forum bilateral route. At that time, there were many jurisdictions using the same bilateral route but the requirement was, that countries selecting the bilateral route would have negotiated a minimum of 60 bilateral agreements for the automatic exchange of information. Unfortunately, up to the end of May we had only negotiated two and so we were obviously far behind in meeting that commitment. “Other jurisdictions Mr. Speaker, chose to exchange via the conventional, mutual administrative assistance in tax matters (MAAT), as amended by the 2010 protocol.”
He noted that amid the pressing concerns regarding The Bahamas’ ability to successfully implement the standards by 2018, in addition to the continued international negative press on the same, The Bahamas gave consideration to signing the MAAT.
In March 2017, after approximately 96 jurisdictions that signed the MAAT, The Bahamas was viewed as one of the last country’s left, to commit to signing the MAAT; with only two others presently not signing onto MAAT but have agreed to exploring the agreement.
“In May 2017, The Bahamas expressed its intentions to the OECD’s Secretary General, to sign on to this convention. Mr. Speaker, the Automatic Exchange of Financial Accounting Amendment Bill 2017 makes provisions for The Bahamas, in the very near future – in fact next week, to sign onto the convention on mutual administrative assistance in tax matters, as amended by the 2010 protocol.”
He then went on to share the Amendments to the Act, which were contained in the present Bill before the House.
“Mr. Speaker, to ensure consistency within our tax information exchange regime, the administrative office, offences and penalties have been benchmarked against our competitive jurisdiction, the Cayman Islands, as they have also included penalties for breaches of their substantive Act, implementing the common reporting standard.
“Notably absent from the Cayman Islands legislation is an imprisonment component, thus our reasoning from not including the same within this Bill. Further Mr. Speaker, the Bill also seeks to make provisions for the Minister to specifically make regulations to give effect to tax conventions accepted by the government of The Commonwealth of The Bahamas.”
He added that fines that are outlined in the Act with respect to breaches can be up to $300,000.00 while unintentional omissions, fines can be in the amount of $1,000.00. “You can see that we are very serious about the enforcement of these regulations because they do carry significant penalties.
“Mr. Speaker, I have laid the regulations for the Automatic Exchange of tax Information which came into effect March 2017, and are now being amended today.”
He shared that the OECD’s council conclusion is important for the entire Bahamian populous to understand, as it affects all, regardless of their direct affiliation within the financial sector.
“This is important Mr. Speaker, because for the average man, these Bills are confusing, and they do not really see how they relate to them, but when I read these direct quotes from the conclusion, I hope that persons can understand why it is so important to do what it is that we are doing today because it can have an effect on the daily lives, of the ordinary person.”
He noted that based on the councils most recent conclusions, the OECD is now encouraging their members to take defensive (economic) measures against what they term non-cooperative states.
Turnquest listed the recommendations, which include member states taking certain coordinated defensive measures in the tax area, as set out in Annex 3, in accordance to their national laws, and in accordance with the obligations under EU and international laws.
“Mr. Speaker, you can see from that list of quotes that I just read, that the OECD and its member states are deadly serious about the action they intend to take, when they talk about defensive measures,” said the DPM.