15/03/23

BAHAMAS: ‘No’ to global minimum tax would mean revenue forgone, says Economic Affairs Minister.

As published on ewnews.com, Wednesday 15 March, 2023.

Economic Affairs Minister Michael Halkitis said yesterday that while The Bahamas can say ‘no’ to OECD’s global minimum tax, such a move would represent a foregone opportunity to boost government revenue.

Halkitis was asked if the government could reject the move while speaking as part of a panel on the global minimum tax.

“Of course, we can say no,” he said.

“There will be an opportunity for revenue that will be forgone if we do say no. I think we should recognize that this is not the final salvo so to speak. In my view, this is a crack in the door. This is not the last I believe we will hear from the OECD when it comes to global tax. I think their objective is to have one global tax rate.”

Halkitis noted that implementing the global minimum tax will require a tremendous amount of capacity building as this nation does not have a traditional corporate income tax or personal income tax.

In July 2021, the government expressed its support for the proposals of the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS), to reform the global taxation system. This initiative would see this nation impose a corporate income tax on businesses in The Bahamas with gross annual earnings of $750 million Euros or greater. The tax will be a minimum of 15% of net income generated in the Bahamas by a small subset of companies operating in the Bahamas that are part of groups exceeding the revenue threshold.

Caribbean economist Marla Dukharan yesterday expressed her disapproval of the global minimum tax as she suggested that it was another effort to further marginalize smaller nations like The Bahamas.

“This tax be used to further marginalize smaller countries. There will be no transparency. Why should we expect the implementation of this tax to be fair,” said Dukharan.

She added: “The OECD is not about small countries it is about the big rich countries. It doesn’t include us.”