By NEIL HARTNELL
Tribune Business Editor
The Bahamas “must get ahead” of the European Union’s (EU) assault, a well-known accountant is arguing, and “address anything seen as remotely non-compliant” before new blacklisting threats emerge.
Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez managing partner, told Tribune Business in a recent interview that The Bahamas must now look forward and “move as quickly as possible” to escape the EU’s tax co-operation blacklist so that any negative impact for its financial services industry is minimised.
Criticising the “name and shame” tactics that the 27-nation bloc and other bodies have been employing against this nation since 2000, he added that it was also critical that The Bahamas somehow position itself “in front of the standard” that these groups will try to impose next.
The Bahamas’ latest blacklisting is likely to be ratified by the EU Council next week, and Mr Gomez branded the move as “very unfortunate” for efforts by both the Government and private sector to market this nation and its financial sector as well-regulated jurisdiction that is both compliant and co-operative.
“My initial reaction was: ‘What? Again? What now?” he recalled upon learning of the imminent EU move. “When you look at the impact on our business, no one wants to be in this position. No one wants to take a chance that, for this kind of reason, we could lose potential business.....
“We must move quickly to get ourselves out of that category because we are simply a very compliant jurisdiction. This ‘name and shame’ business, it’s been going on for two decades, and every time we’ve reached where we ought to be something sets us back.
“We need to get ahead of where we are today with the requirements by these organisations. The moment we start to appreciate that we are fully compliant, we get these ratings given. We must get ahead of the standard, if not fully compliant. Ahead of them to show we are ahead of the standard.”
Several observers have suggested that the ultimate goal of the EU, and fellow travellers such as the Organisation for Economic Co-Operation and Development (OECD), is to force The Bahamas to implement income taxation - certainly the corporate variety, as per the 15 percent minimum tax rate initiative, and possibly personal income taxation as well.
But Paul Moss, Dominion Management Services’ president, who has advocated that The Bahamas introduce a corporate income tax at lower than 15 percent, told Tribune Business that even if the country adopted such a reform the onslaught would continue until high-tax European states force it out of the financial services business.
Backing the Prime Minister’s recent address to the United Nations General Assembly, he added of an income tax: “I think it would mitigate the issue, but I don’t think when we implement such a tax that it’s going to stop. It’s not going to stop; it’s going to continue. Their desire is to put us out of business, and let themselves be able to flourish and not The Bahamas.”
Urging The Bahamas “to fight”, Mr Moss renewed his call for this country to seek out strength in numbers by joining with similarly-affected international financial centres (IFCs) and small island developing states to counter the EU. Asserting that countries will simply be picked off one-by-one if they respond individually, he added: “Sometimes we give away the shop away.
“There has to be a meeting of the minds, and all jurisdictions come together to craft a strategy to respond to it and how best they can use their leverage to stop it. We know there are billions of dollars being laundered in New York and London, and it’s so difficult for locals to even get an account and participate freely. They won’t stop until we get ourselves together. Once we fight and get off the list, we can relax a little bit, but they will never give up.”
EU-friendly media were this week circulating a draft conclusion detailing why The Bahamas, together with Anguilla and the Turks & Caicos Islands, are being added to the blacklist. Dated September 22, 2022, it said: “The Bahamas facilitates offshore structures and arrangements aimed at attracting profits without real economic substance by failing to take all necessary actions to ensure the effective implementation of substance requirements.”
However, it acknowledged that The Bahamas had committed to addressing concerns relating to its adherence to the OECD’s Base Erosion and Profit Shifting (BASE) initiative, designed to prevent tax avoidance by multinationals with an annual turnover that exceeds $850m.
“The Bahamas committed to implement the country by country minimum standard by addressing the [OECD] inclusive framework on BEPS’ recommendations in due time, so that this is reflected in the inclusive framework Action 13 peer review report in the autumn of 2023 and/or activating country by country exchange relationships with all EU member states according to the agreed deadline,” the purported draft added.
Mr Gomez, meanwhile, acknowledging that the blacklisting “cannot be anything good”, added: “Naturally we must move quickly to correct the situation. It just seems, particularly for us in the industry and those of us who take our show on the road to promote The Bahamas as a well-regulated jurisdiction investors should be doing business in, to have this kind of reaction from the EU and OECD, it’s very unfortunate.”
Conceding that it was highly unlikely The Bahamas will escape the EU listing until 2023 at earliest, the Baker Tilly Gomez chief added that this nation must prevent investors from using it as an excuse to move their business elsewhere.
“We must move quickly for those looking to formalise and finalise their business strategy, which up to now includes The Bahamas, as you don’t want to place them in a rethink mindset where they move on to a jurisdiction that is not blacklisted,” he added.
“It has to be seen that The Bahamas is doing everything it can. To put the blacklist on us as they have is something we have to put behind us as a jurisdiction. Let’s get on top of it and address anything seen as remotely non-compliant.”