CARICOM nations may pursue earlier proposals to take their views on OECD initiatives relating to so-called “harmful tax competition” to the World Trade Organisation (WTO). This was a report coming out of the 12th Inter-Sessional Meeting of CARICOM Heads of Government in Barbados last week, but with indication that such representation to the WTO would be made only in the event satisfactory arrangements cannot be worked out with the OECD. The recommendation came as part of an approved Action Plan relative to CARICOM efforts to combat pressures from the OECD concerning tax practices in the offshore financial sector.
The Bahamas was represented at the Heads of Government meeting by Prime Minister the Rt. Hon. Hubert A. Ingraham. The Prime Minister was accompanied by the Minister of Foreign Affairs as well as by the Attorney General of The Bahamas.
Currently, CARICOM countries are represented on a joint Working Group of Commonwealth and OECD jurisdictions, mandated to find “a mutually acceptable political process by which the principles of transparency, non-discrimination and effective exchange of information can be turned into commitments”. The Group also is charged with examining how to promote a framework within which the idea of a more inclusive global dialogue on tax issues might be progressed.
Regional concerns on this matter received some support earlier this month when Senator Don Nickles, the Assistant Majority Leader of the US Senate, wrote to US Treasury Secretary Paul O’Neill urging that he defend international tax competition and effectively disavow US support for the OECD’s initiatives. Senator Nickles pointed out that “in today’s global economy, tax policy is an important part of a nation’s competitiveness” and, further that the U.S. economy has prospered in part because of the attraction of savings, investment, and entrepreneurial talent from other nations. The Senator questioned US participation in an effort viewed as inconsistent with its long-term tax agenda.
The OECD is one of several supranational bodies seeking changes in the laws and practices of offshore centres (OFCs) delivering international financial services:-
The multi-governmental, policy-making Financial Action Task Force, which included The Bahamas on a “blacklist”, specifically is concerned with countering money laundering. The Bahamas shares the objectives of the FATF and has implemented an ambitious legislative and administrative program to be at the forefront of OFCs fighting money laundering.
Addressing the Pacific Rim Money Laundering and Financial Crimes Conference late last year, Under Secretary for Enforcement at the US Treasury, James E. Johnson, acknowledged the progress The Bahamas has made in addressing and remedying deficiencies identified by the FATF in its anti-money laundering initiatives. Since that time, the US granted Qualified Jurisdiction status to The Bahamas, signaling the US government’s continuing acceptance of The Bahamas as an international financial center. QJ status places The Bahamas on a level playing field with other similarly qualified competitors, both regionally and internationally.
Former US Representative to the OECD Dan Clune, now serving as Deputy Chief of Mission at the US Embassy in Nassau, recently told The Tribune (daily newspaper) that the US and the international community have recognised the fact that The Bahamas has enacted world-class legislation. Referring to published reports from the FATF acknowledging the impressive strides made by The Bahamas with regard to its counter-money-laundering regime, DCM Clune appears to be of the opinion that The Bahamas is very close to a resolution of the FATF blacklisting.
Appropriate representations have been made to the Swiss-based Financial Stability Forum, the G-7 initiated group concerned with proper supervision of the global banking system. The Government indicated to the FSF its commitment to adoption of regulative, administrative and legislative steps to strengthen the financial sector; in fact, many of these changes were congruent with already existing domestic plans to upgrade local infrastructure. Prime Minister Ingraham has expressed the Government’s confidence in its initiative to enhance and strengthen the regulation and supervision of the financial services sector — to the benefit of all who are engaged in sound and legitimate financial services business. With the introduction of new and amended financial services industry legislation at the end of 2000, The Bahamas has acted “to ensure that good, legitimate business will not be enticed away from The Bahamas to presumably better regulated jurisdictions”.
The Bahamas’ response to all initiatives was based on the principle of “constructive co-operation, with robust defence of legitimate national interests” and throughout the process it has insisted on a fair and transparent process, leading to a common standard adopted by all co-operating onshore and offshore financial centres. The Bahamas believes this is essential to ensure the level playing field sought by all parties including the G7 and OECD.
The Bahamas intends to remain at the forefront of the increasingly integrated global environment for the conduct of international financial services business by keeping pace with global trends.