The Ministry of Finance has issued a PUBLIC NOTICE on a 30-Day Public Consultation on the “Proposed Tax Information Exchange Act, 2003”.
The Notice invites comments on or before Friday, November 7, to be submitted to:
Ministry of Finance
Third Floor, Cecil Wallace-Whitfield Centre
West Bay Street
P.O. Box N3017
Nassau, N.P. The Bahamas
The Bahamas Financial Services Board also has invited its members to submit comments to BFSB’s Legislation Sub-Committee, which will be presenting its formal comments on the draft Act.
Last year, The Bahamas secured further approval by the US Treasury of its Know-Your-Customer rules and its qualified jurisdiction status under the Internal Review Services programme, through the signing of an agreement with the United States for the provision of information with respect to taxes and for other matters between the two Governments.
Under the agreement, The Bahamas made a commitment to provide as of 2005 (i.e, for taxable years which begin in January 1, 2004) information that may be available in The Bahamas that is relevant to a particular case, where the United States Government has exhausted all measures within the United States, and the Ministry of Finance in The Bahamas is of the opinion that sufficient evidence exists to support criminal tax evasion of United States federal tax.
Importantly, any information obtained through this agreement cannot be shared with other countries. Further, in addition to the burden to prove wrongdoing, strong anti-fishing provisions are an integral part of the agreement. Similar arrangements are slated to begin in 2007 with respect to civil tax offense of United States Federal tax laws. However, The Bahamas continued to seek a level playing field by referring to the terms of similar agreements that the United States may negotiate with other countries over the upcoming years.
The United States had indicated that an acceptable level of exchange of criminal and civil information was a prescribed condition to renewing Qualified Jurisdiction status for all countries.
At that time, the Minister of Finance said the agreement with the U.S. reinforced government policy to see The Bahamas continue as a viable and recognised international financial centre.
The conclusion of a TIEA with the US is not seen to represent a disadvantage to The Bahamas vis-a-vis its competitors in the delivery of financial services.
In addition to removing the uncertainty of The Bahamas’ continued designation as a Qualified Jurisdiction (for the purposes of permitting financial institutions to escape a penalty rate of withholding tax on the income earned on US securities), the agreement also provides access to a Convention Tax Deduction Benefit for all US-based companies and corporations holding business meetings and conferences in The Bahamas – effective January 2006.
The draft bill currently in circulation is for enabling legislation to implement the agreement with the United States.