The Bahamas has challenged this Report, telling OECD Officials that the Report lacks balance and discriminates against countries whose tax regimes are unilaterally declared by the OECD to be harmful. The Bahamas’ reaction is one of the first challenges to the OECD’s legitimacy in making its allegations.
The Bahamas told the OECD that it is prepared to continue to exchange views on the Report on the condition the OECD fully recognizes the sovereignty of the participants like the Bahamas and that any remedies sought are universal and non-discriminatory.
In its statement to the OECD, the Bahamas expressed concerns about the hypocrisy of some of the conclusions in the Report and the OECD’s heavy-handed approach to dealing with legitimate, properly regulated international financial centres.
For example, the Bahamas advised the OECD that the perception that it had been summoned to Paris is unacceptable. In its statement the Bahamas said it accepted the invitation to attend since “we are genuinely interested in a dialogue that tackles the concerning issues because we believe this is not inconsistent with our own commitment to a sustainable respectable international financial centre”.
The Bahamas said it is determined to safeguard the legitimacy and reputation of its international financial sector. “International financial services now account for such a substantial proportion of the Bahamian economy that we will take whatever steps necessary to ensure its integrity and recognize any balanced, non-discriminatory initiative whose objective is the sustainability of a reputable financial services sector.”
As a sovereign, mature and responsible international centre with more than 60 years in the business, the Bahamas has been careful to develop a regulatory and legislative infrastructure that will sustain a sound financial services environment, while allowing it to progress at the same time.
The Bahamas was the first international financial centre to criminalize money laundering and the country recently amended the original legislation to provide for the registration of confiscation orders in drug trafficking cases.
The Bahamas has not had, throughout its entire history, a tax on income or capital and does not hold the view that such taxes are inherently a natural component of an appropriate tax regime. “The Bahamas did not come, by experimentation or contrivance, upon the tax regime that it now has in place. We therefore do not accept that on the basis of our historic and established tax structure alone that we should be categorized as a harmful tax haven,” the statement said.
The OECD was told that while a financial centre may be used for illegitimate purposes that alone does not make it illegitimate. “It is only when a centre is not clearly taking appropriate action to eliminate and eradicate conditions for such illegitimacy that its integrity comes into question”. The government pointed out that onshore financial centres may also be used for illegitimate purposes, but this fact alone has never been sufficient to put their legitimacy in doubt”.
The Bahamas is in a fortunate position. It is an established, well regulated, offshore centre. It is an independent country. This sets a good example. This is developing. Other offshore centres are now standing up and questioning direct or implied allegations that they should be subservient to industrial countries. This is not longer happening. Developed offshore centres, like the Bahamas, offer as good, or perhaps better, international financial services than can be obtained in New York or London. If governments like throwing the cliché’s around about the “global market place” they, and the media, have to be told a few of the facts of life.
The tide is changing and it will be an interesting decade. The Bahamas has shown the way.
Based on articles by John Goldsworth, Editor of TRUSTS & TRUSTEES