Blacklist

EU Blacklist: What has really changed?

  • Bahamas remains on grey list

  • Strategic not myopic approach to financial services

  • New standard imminent and inevitable

  • Government kicking can down the road

  • Time to govern for Bahamians

The recent announcement by the European Union (EU) that The Bahamas remains on its grey list and has not been blacklisted is a welcomed development. This follows the removal of The Bahamas from the EU blacklist to the grey list in May 2018 after the government made several commitments to carry out reforms.


While the temptation to embark on celebratory exercises and seek political brownie points may seem attractive to the government, it would be prudent not to do so. In reality, The Bahamas’ status as a country on the EU grey list has not changed since May 2018.


According to the European Commission, 25 countries from the original screening process have been cleared; The Bahamas is not one of those countries. The Bahamas remains on a grey list of countries that will continue to be monitored in 2019 and is listed among 34 jurisdictions that have already taken steps to comply with the requirements under the EU listing process. The EU has directed that jurisdictions on this list must complete this work by the end of 2019, to avoid being blacklisted next year.


The Democratic National Alliance (DNA) reiterates that the current administration continues to adopt a myopic approach to the second pillar of our economy. The government has taken the view that the avoidance and removal from adverse listings by international agencies is their priority over developing a growth action plan for the industry. They are squandering an opportunity to truly govern for the Bahamian people by rebranding, refocusing and reviving the financial services industry.


As we have seen in times past, the goal posts will continue to shift as new standards will be established to undermine the value proposition of The Bahamas as an International Financial Centre (IFC). It would be naïve for the government not to realize that the next standard or hurdle is imminent and inevitable. We submit that it is even more egregious for the government to adopt a reactive approach and kick the proverbial can of comprehensive tax reform down the road.  It is an open secret that the ultimate goal of certain global organizations is the demise of the Bahamas' financial services industry. The government cannot be complicit in this endeavor by continuing to capitulate to the extra territorial demands of multilateral ‎bodies until we have no financial services business to regulate. 

 

The discussion about a global taxation standard has commenced and it is only a matter of time before this becomes the new agenda. In the interim, The Bahamas must be proactive and strategic in shedding the tax haven label while articulating a vision for the future of our financial services industry.


It is common knowledge that we have a tax system that is regressive and oppressive to the detriment of the masses. The middle class and vulnerable in society bear the brunt of the tax burden imposed by a government that has worsened the misery index. The question on the lips of Bahamians is when will this FNM administration start governing for them rather than special interest groups and international agencies?


Arinthia S. Komolafe, Leader

Democratic National Alliance


EU Grey List: Welcomed but Not Out of Woods

• We must look beyond December 2018
• Bahamian people deserve to know commitments made to EU
• Government must deliver on commitments
• Prudent decisions and proper consultation essential

The news that The Bahamas has been removed from the European Union’s (EU) list of non-cooperative tax jurisdictions is welcomed. According to a press release issued earlier today, The Bahamas has been moved from Annex 1 (blacklist) to Annex II (grey list) by the EU.

While this is a notable development, we are not out of the woods yet and there is much work to be done to ensure that The Bahamas is totally removed from any adverse listing published by the EU. This is bearing in mind that countries on the grey list can be moved back to the blacklist if they fail to honor their commitments.

The rationale for the addition of The Bahamas to the grey list is that commitments have been made by The Bahamas at a high political level to remedy EU concerns. It is imperative that these commitments are shared with the Bahamian people in the spirit of transparency and accountability. It is noteworthy to state that several jurisdictions have consented to the publication of their commitment letters on the EU’s website thereby providing their people with access to commitments made on their behalf.

The clock is now ticking as the December 31, 2018 deadline for delivering on our commitments to the EU is fast approaching. We are hopeful that this impending deadline will not result in rushed or imprudent decisions and the ditching of proper consultation with stakeholders and the Bahamian people. In the days ahead, the Bahamian people will be looking to the Government to lay out its comprehensive plan to ensure our removal from the EU grey list. This should include the approach to be taken in addressing the fair taxation criterion and clarify the framework for rectifying the economic substance and ring fencing issues identified.

We implore the Government to look beyond the upcoming deadline and develop a comprehensive Financial Services Growth Action Plan (FSGAP) which will reposition The Bahamas as a premier international financial centre. Our focus must extend beyond removal from blacklists and compliance with international standards to strategic planning for the creation of a thriving financial services industry. The global landscape for financial services has changed and continues to evolve; The Bahamas cannot afford to be left behind.

The international pressures we face present us with a unique opportunity to re-imagine, reform, retool and rebrand our financial services industry. We must look at the bigger picture and the Government must not be myopic in its responses. The ultimate objective must be to place the interests of the Bahamian people ahead of all other interests. We stand ready to assist the Government in a non-partisan effort in the national interest.

Arinthia S. Komolafe
Deputy Leader, Democratic National Alliance

Re: Removal from Blacklist

The decision of the European Union Code of Conduct Group (COCG) to recommend to the Economic and Financial Affairs (ECOFIN) Council that The Bahamas should be removed from the list of non-cooperative jurisdictions for tax purposes is a welcome development. The announcement that our removal from the blacklist is expected to be approved and made official by the ECOFIN Council by May 25, 2018 is good news.

The short period of time between the inclusion of The Bahamas on the infamous blacklist and the COCG's recommendation for The Bahamas' removal suggests that we ought not to have been placed on the list in the first place. The impact on our nation's reputation because of the EU's action cannot be quantified or ascertained. However, we are optimistic that this will also serve as a wakeup call to the Government to ensure that there is no miscommunication or inadequate responses to requests for information in future.

Our efforts must now be channeled towards meeting the December 31, 2018 deadline for honoring the commitments made to the EU. More importantly, we must look beyond the impending deadline to develop a robust Financial Services Growth Action Plan which articulates our strategy for the growth of this vital sector going forward.

We cannot always be in a reactive mode to international pressures on our financial services industry; rather we must chart our own course for the future. The ever-changing goal posts of international agencies and groupings demand that our focus is much more than avoiding or being removed from one list after the other. It is time to embark on initiatives for our own sake and place us on a path to progress and prosperity. These initiatives must involve a deliberate strategy to shed the tax haven label currently attached to The Bahamas.

We are hopeful that the Government will take heed and we stand ready to assist in this regard.

Arinthia S. Komolafe, Deputy Leader
Democratic National Alliance

EU Blacklist: Did the Government Drop the Ball?

EU Blacklist: Did the Government Drop the Ball?

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?