The Bahamas was today added to the European Union’s list of non-cooperative jurisdictions for tax purposes (blacklist). The blacklisting of The Bahamas was carried out despite last minute efforts by the Government to prevent this adverse action by the EU and following an initial exemption from the screening process due to the impact of hurricanes on the Caribbean region in 2017.
In its press release announcing the addition of The Bahamas to the infamous list, the EU stated that The Bahamas “failed to make commitments at a high political level in response to the EU’s concerns”.
While multilateral and international agencies are known to engage in the continuous shifting of the goal post in relation to tax cooperation or compliance, the EU’s commentary begs the question: Did the Government of The Bahamas drop the proverbial ball in this matter?
The EU had published on its website, all its letters seeking commitments from jurisdictions. Additionally, commitment letters received from jurisdictions for which high level political commitments have been deemed adequate by the EU were published on the referenced website with their consent. A review of the EU’s website shows that either there was no commitment letter received from The Bahamas or the Government did not give its consent for the publication of the commitment letter sent to the EU (see attached response from Panama as an example).
One of the documents published on the EU’s website is a correspondence dated 26 January 2018 from the EU to the Bahamas Government (see attached). In the previously mentioned letter, the EU outlined details of its assessment, findings and concerns in relation to this jurisdiction. The letter noted that “the Code of Conduct Group will not recommend to the Council of the EU to include in the list of non-cooperative jurisdictions for tax purposes any jurisdictions which commit to correct the identified concerns by 31 December 2018 at the latest”. However, The Bahamas was required to respond to the EU by 28 February 2018.
The Government must confirm that our nation’s response was delivered to the EU by the February 2018 deadline. The Bahamian people are hopeful that the Government did not put our financial services sector in jeopardy and the country’s reputation at risk due to a lack of focus, deficit of competence or a lackadaisical approach to governance.
The Bahamas had signed on to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, the Multilateral Competent Authority Agreement and joined the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) December 2017. It is unfortunate that the Government having expended much effort and resources in collaboration with the private sector to avoid this adverse listing, was unable to prevent The Bahamas from being blacklisted. Exactly what went wrong? The Bahamian people need to know.
We reiterate that The Bahamas has an opportunity to embark on comprehensive tax reform with due regard for the introduction of a more equitable and progressive tax system for our people. Our focus must also shift from the short-term goal of avoiding blacklists to the development of a comprehensive Financial Services Growth Action Plan (FSGAP). We must become more proactive and less reactive in relation to our economy in general and our financial services industry.
The DNA stands ready to assist the Government in ensuring that The Bahamas is removed from the EU blacklist as soon as possible and in the development of a vision for the financial services industry going forward.
Arinthia S. Komolafe
Deputy Leader, Democratic National Alliance