As published on tribune242.com, Friday 21 February, 2020.
The Netherlands yesterday demanded that The Bahamas implement a corporate income tax at 9 percent or higher as the price to escape tax non-cooperation “blacklist”.
K Peter Turnquest, deputy prime minister, told Tribune Business in response to the demand from the Netherlands’ ministry of finance that The Bahamas “will not be dictated to be any foreign state” as to its taxation policy and structure.
His comments came after a Dutch finance official, responding to this newspaper’s inquiries, said its tax blacklist criteria is “made up differently” from that of the 27-nation European Union (EU), of which it is a member. The Bahamas was this week removed from the bloc’s monitoring ‘grey list’ after being deemed to have fully implemented all the reforms required to address its demands.
However, The Bahamas remains on the national blacklists of both France and the Netherlands, and is unlikely to be removed from the latter’s any time soon. The Dutch official said: “A country/jurisdiction gets a place on the Dutch list when there either is no corporation tax or a corporation tax rate that is lower than 9 percent.
“This is the case in The Bahamas, and therefore The Bahamas is - and stays on - the Dutch list. We make up this list every year and the end of a year. A country/jurisdiction can only get from the list if the corporation tax rate is a 9 percent or above.”
The Dutch position adds to the building pressure on The Bahamas and other low or zero-rate tax international financial centres (IFCs) to consider introducing a low-rate corporate income tax. The Organisation for Economic Co-Operation and Development (OECD) is pushing for a “minimum level of” taxation to combat tax evasion by multinationals - a corporate tax in all but name.
Mr Turnquest, acknowledging such pressures yesterday, told Tribune Business: “We are a sovereign territory and, as a result, we have the right to determine our tax structure, and we will consider international standards.
“To the extent that the international community rises to a minimum tax rate, we will consider that and, if we wish to adjust our system, to reflect that. But to this point we are willing, and we have demonstrated that we co-operate with all international partners on tax matters. We will not be dictated to by any foreign state.”
Mr Turnquest added: “To be clear, the AG (Carl Bethel, the attorney general) is requesting a bilateral with the Netherlands today to discuss areas of mutual understanding and consensus. While the international community seems to be moving towards a minimum global corporate tax rate, that is not the current standard and, as such, ought not be the standard by which any country blacklist and thereby harms the reputation and economy of another sovereign state.
“The Bahamas, as demonstrated by its commitment and co-operation with the EU and the OECD, and the continued work towards meeting all of the FATF (Financial Action Task Force) criteria, shows that it is a partner in the global fight against anti-money laundering and counter-terrorism financing and harmful tax practices.
“We invite all of our partners to engage in fulsome discussion with The Bahamas in respect to their individual concerns, which we are eager to address within the confines of our sovereign right to determine our tax structure, which has been deemed to not be harmful by the Global Tax Forum and now the OECD.”
National blacklists, such as those of France and the Netherlands, are not as harmful as initiatives launched by the likes of the FATF and OECD. However, they do pose a potential reputational risk and deterrent to their citizens and companies doing business with this nation. They also risk encouraging other nations to do likewise.