By NEIL HARTNELL
Editor-in-chief of the Tribune
Bahamas ‘needs to get ahead’ of European Union (EU) onslaught, says well-known accountant, and ‘deal with anything deemed non-compliant at a distance’ before new listing threats black do not emerge.
Craig A. ‘Tony’ Gomez, the managing partner of Baker Tilly Gomez, told Tribune Business in a recent interview that the Bahamas must now look to the future and “act as quickly as possible” to escape being blacklisted. EU tax cooperation so that any negative impact to its financial services industry is minimised.
Criticizing the “name and shame” tactics that the 27-nation bloc and other bodies have employed against this nation since 2000, he added that it was also essential that the Bahamas somehow position itself “before the norm” that these groups will then try to impose.
The Bahamas’ latest blacklist is set to be ratified by the EU Council next week, and Mr Gomez called the decision “very unfortunate” for the efforts of both the government and the private sector to market this nation and its financial sector as a well-regulated jurisdiction. which is both compliant and cooperative.
“My first reaction was, ‘What? Still? What now?” he recalled learning of the impending EU decision. “When you look at the impact on our business, nobody wants to be in that position. Nobody wants to take the risk that, for this kind of reason, we could lose potential business…
“We need to act quickly to get ourselves out of this category because we are simply a very compliant jurisdiction. This “name and shame” thing has been going on for two decades, and every time we’ve reached where we should be, something sets us back.
“We need to move forward from where we are today with the demands of these organizations. The moment we start to appreciate that we are fully compliant, we get those marks. We must go beyond the norm, if not fully compliant. Ahead of them to show we’re ahead of the norm.
Several observers have suggested that the ultimate goal of the EU and other travelers such as the Organization for Economic Co-operation and Development (OECD) is to force the Bahamas to implement income tax – certainly the variety of corporations, depending on the 15% minimum tax rate initiative, and possibly also personal income taxation.
But Paul Moss, president of Dominion Management Services, who has advocated for the Bahamas to introduce corporate tax below 15%, told Tribune Business that even if the country passes such reform, the onslaught will continue until what high-tax European states are forcing out of the financial services sector.
Supporting the Prime Minister’s recent speech to the UN General Assembly, he added of an income tax: “I think it would alleviate the problem, but I don’t think when we put in a such a tax, it will stop. It’s not going to stop; it will continue. Their desire is to bankrupt us and prosper, not the Bahamas.
Urging the Bahamas to “fight on,” Moss renewed his call for the country to seek strength in numbers by joining with International Financial Centers (IFCs) and similarly affected Small Island Developing States. to counter the EU. Saying that countries will just be selected one by one if they respond individually, he added: “Sometimes we give away the shop.
“There needs to be a meeting of minds, and all jurisdictions are coming together to strategize how to respond to it and how they can best use their influence to stop it. We know that billions of dollars are being laundered in New York and London, and it is so difficult for locals to have an account and participate freely. They won’t stop until we get together. Once we fight and get out of the roster, we can relax a bit, but they’ll never give up.
Pro-EU media circulated a draft conclusion this week explaining why the Bahamas, along with Anguilla and the Turks and Caicos Islands, are being added to the blacklist. Dated September 22, 2022, it stated: “The Bahamas facilitates offshore structures and arrangements aimed at attracting profits without real economic substance by failing to take all necessary steps to ensure the effective implementation of the substance requirements.
However, he acknowledged that the Bahamas was committed to addressing concerns related to its membership in the OECD Base Erosion and Profit Shifting (BASE) initiative, designed to prevent tax evasion by multinationals whose annual turnover exceeds 850 million dollars.
“The Bahamas is committed to implementing the minimum standard country by country by addressing the [OECD] Inclusive Framework on BEPS Recommendations in a timely manner, so that this is reflected in the Action 13 peer review report of the Inclusive Framework in fall 2023 and/or by activating country-by-country exchange relationships countries with all EU member states within the agreed timeframe,” the alleged draft added.
Mr. Gomez, meanwhile, acknowledging that blacklisting “cannot be a good thing,” added: “Naturally, we need to act quickly to correct the situation. It just seems fair, especially to us in the industry and those of us who take our show on the road to promote the Bahamas as a well-regulated jurisdiction in which investors should do business, to have that kind of reaction from the EU and the OECD, it is very unfortunate.
Conceding that the Bahamas was highly unlikely to escape the EU list until 2023 at the earliest, Baker chief Tilly Gomez added that the nation must prevent investors from using it as an excuse to move their business elsewhere.
“We need to act quickly for those looking to formalize and finalize their business strategy, which so far includes The Bahamas, because you don’t want to put them in a re-engineered mindset where they move to a jurisdiction that is not not blacklisted,” he added.
“You have to see that the Bahamas is doing everything they can. Blacklisting us like they did is something we need to put behind us as a jurisdiction. Let’s go ahead and deal with whatever is considered remotely non-compliant.”