The Caribbean jurisdiction is no longer on a list of places deemed not fully co-operative about tax matters. Getting off the list will be a boost as The Bahamas continues to recover from last autumn's devastating hurricane.
Following a series of reforms, the European Union has now removed The Bahamas from a list of non-cooperative jurisdictions for tax purposes.
This was effected by the EU’s Economic and Financial Affairs Council after a meeting in Brussels yesterday, according to a statement from the Central Communications Unit, Ministry of Finance in the country.
In March last year the EU put The Bahamas - which operates under English common law and is an independent state - on the EU’s Annex II “the grey list”.
While being included on the list is less serious than being on the “Annex I black list” of the EU list of non-cooperative jurisdictions for tax purposes, the categorisation still meant that The Bahamas was being monitored by the EU to see whether it was putting economic substance requirements into force. (“Substance” relates to steps that providers of entities such as trusts and companies must show to prove that they are involved in actual commercial/economic activity and are not just an empty shell for tax or other purposes.)
“With today’s move, The Bahamas has addressed all of the concerns on economic substance, removal of preferential exemptions and automatic exchange of tax information,” the statement said.
“This news of our removal from the EU list affirms that The Bahamas takes its position as a global financial centre very seriously. Coming off this list was not an easy process. We engaged many stakeholders and executed a comprehensive strategy to not only address the EU’s concerns but also to defend the jurisdiction against recent attacks on the legitimacy of our financial services business,” said Deputy Prime Minister and Minister of Finance, Kevin Peter Turnquest.
The statement said that figures from the government’s technical advisor team met with the EU’s Code of Conduct Group to engage in discussions on the integrity of The Bahamas’ tax governance measures. Most of the discussions centred on the introduction of economic substance requirements for investment funds.