The Bahamas was not included on the European Union’s (EU) list of Non-Cooperative Jurisdictions for Tax Purposes, which was updated by the EU’s Economic and Financial Affairs Council today. This decision was the result of the proactive efforts of the Government to safeguard the global competitiveness of the financial services industry.

“The Government is very encouraged and pleased by the EU’s decision to not include The Bahamas on its list of non-cooperative jurisdictions. The decision is the result of a strategic and comprehensive approach by the Government’s team in consultation with stakeholders. I would like to thank the private sector for its valuable contribution, and reiterate our Government’s commitment to continue to do what is necessary to maintain the standing of the Bahamas as a respected international financial center,” said Prime Minister the Most Hon. Dr Hubert Minnis.

Over the past year, the Government participated in a number of bilateral meetings with the EU and implemented broad measures to prevent the use of Bahamian corporate vehicles as conduits for tax avoidance and evasion. The Government’s strategy to mitigate taxation concerns has enabled the country to be regarded as a partner on international standards on information exchange, tackling harmful tax practices and dismantling artificial tax structures.

“Our ongoing cooperation with the EU and the positive evaluation of the country sends a strong signal to the international community that The Bahamas’ financial services industry is stable and governed by a sound regulatory regime. The Government will continue to promote engagement with all stakeholders on these issues to ensure The Bahamas remains the preferred jurisdiction of choice for financial services in the region,” said K. Peter Turnquest, Deputy Prime Minister and Minister of Finance. 

“I commend the Technical Working Committee for their tireless efforts, as they have been working assiduously for over a year to push the reform process forward. This required the strengthening of our legislative and regulatory framework, among other things,” said Minister Turnquest.

The primary focus of the Government with respect to financial services is ensuring the effectiveness of the legal and regulatory framework and driving the growth of the industry. The significant financial and human capital resources which have been allocated to various ministries and government departments underscores the importance that the Government is giving to complying with the evolving international standards.

Background Information

Extensive reform in the financial services industry has brought about changes to the business license and regulatory regime for financial institutions which removes the distinction between domestic and international financial institutions, and the enactment of a suite of new laws embody this commitment to curb harmful tax practices. These laws include:

1. The Multinational Entities Financial Reporting Act, 2018 which prescribes reporting requirements for multinational groups with annual revenue in excess of $850 million dollars;
2. The Commercial Entities (Substance Requirements) Act, 2018 (and accompanying public guidelines), which requires that certain entities must demonstrate real business activity and have a substantial economic presence in The Bahamas;
3. The Removal of Preferential Exemptions Act, 2018 which equalizes the tax treatment of resident and non-resident companies;
4. The Beneficial Ownership Act, 2018 which requires that the beneficial ownership details of corporate entities be filed and retained in a secure, government database;
5. The Penal Code (Amendment) Act, 2018 which makes tax evasion a crime in The Bahamas.

Since 2017, the EU has reviewed the tax systems of over 92 jurisdictions on concerns that corporations and individuals were using arrangements and corporate vehicles in these jurisdictions to deprive EU member states of tax revenue. The list, circulated today by the 28 nation bloc, highlights countries that are deemed to promote harmful tax practices and facilitate offshore structures without real economic activity. Listed jurisdictions face a range of challenges, including reputational damage and strict restraints on transactions with EU member states and financial institutions within EU member states. All of which can be damaging to a listed jurisdiction’s financial system. The Bahamas was not included on this list.

Throughout 2018, Minister Turnquest, along with the Minister of Financial Services, Trade and Industry and Immigration Hon. Brent Symonette and the Attorney General Senator the Hon. Carl Bethel QC held several face-to-face meetings with the various bodies within the EU that play a role in the decision-making process. In January 2019, the Prime Minster met with senior officials of the European Commission in Brussels to reinforce the message that, as a major international financial center, The Bahamas does not encourage nor condone harmful tax practices within its financial system.