##Bahamas Policy Statement Accepted By The OECD##

The Bahamas has emerged from its OECD discussions on international financial services with a negotiated agreement premised on the establishment of a level playing field for all centres conducting international financial services activities.

The Bahamas has agreed to keep pace with developments adopted by OECD and non-OECD centres, so ensuring preservation of the competitive status of The Bahamas. No changes are proposed to the longstanding tax-free environment for international business, including no income tax, no corporation tax, no capital taxes and no withholding taxes.

As one of the world’s leading centres for international financial services, The Bahamas recognises the value of a robust and constructive relationship with the US and other OECD member countries. The Agreement outlines the measures that The Bahamas is prepared to take in step with OECD member and other competitor countries to achieve transparency and exchange of information.

*”It has been our position throughout that we wish to adhere to standards and timelines which are applied evenly and without exception,”* said Bahamas Prime Minister Hubert Ingraham. He added that, *”The Bahamas would not be bound by obligations which are more onerous or burdensome than corresponding obligations assumed by all other competitor jurisdictions, including OECD-member countries.”*

Noting that the credibility of OECD actions turns on fair demands, US Treasury Secretary Paul O’Neill stated in Senate testimony last year that OECD member countries should hold themselves to standards and timelines at least as rigorous as those to which they hold jurisdictions that are not part of the OECD.

Secretary O’Neill’s remarks recognise that OECD member states must not be permitted to evade responsibilities to the international community which the OECD seeks to impose on non-member states. Four OECD members, including Switzerland and Luxembourg, abstained from the OECD’s 2001 Progress Report on Harmful Tax Practices. The OECD will need to ensure their own membership backs their proposals before pressing others to adopt onerous obligations.

The Minister of Finance of The Bahamas has noted that the Government *”believes strongly that the success of this OECD initiative rests on the adherence to the principle of parity in the obligations assumed by all jurisdictions, OECD and non-OECD member countries, in relation to standards and timelines in the move to greater transparency and information exchange.”*

The call for parity in the standards applicable to the regulation of financial services centres has recently been endorsed by a number of other senior statesmen in OECD member countries. The Commonwealth Heads of Government Meeting in Coolum, Australia ended on March 5, 2002 with a communiqué calling for “standards and timelines for non-OECD jurisdictions no more onerous than those for OECD members”. The Prime Ministers of a number of OECD states including Canada, the United Kingdom, Australia and New Zealand provided support for this principle.

The Bahamas’ commitment is also based on:

* The Bahamas on an equal basis in any discussions in the Global Forum on the design of internationally accepted standards for the implementation of these and any similar commitment;

* Co-ordinated defensive measures being taken against those jurisdictions including OECD Member countries and jurisdictions yet to be identified, that fail to make equivalent commitment or to satisfy the standards of the 1998 Harmful Tax Competition Report, by April 2003;

* The approval of the Parliament of The Bahamas of detailed implementation of any commitments not already provided for under Bahamas law.

*”Our industry has, as its foundation, some of the most recognised and respected banking and financial institutions in the world,”* said Ian Fair, Chairman, Bahamas Financial Services Board. *”The strength of our industry has enabled us to weather what many felt were unfair and inequitable demands by larger, industrialised countries.”*

The Bahamas welcomes the continuation of a constructive relationship with its sovereign partners and their agencies. The Agreement concluded in March shows The Bahamas’ desire to work with OECD to achieve improved regulation for the conduct of international financial services, on the basis of a level playing field with equivalent standards and timelines applicable to all.