Bahamas says it maintains its sovereign right to determine tax structureTuesday, June 08, 2021
NASSAU, Bahamas (CMC) — The Bahamas government says it is conducting an assessment of the impact of the proposals announced by the Group of Seven (G7) rich nations of a landmark deal that could help countries collect more taxes from big companies and enable governments to impose levies on United States tech giants such as Amazon.com Inc and Facebook.
In a statement, the Ministry of Finance said it was also examining the implications the proposals “may have for the domestic tax regime of The Bahamas”.
The agreement by the G-7 finance ministers in London last weekend satisfies a demand by Washington for a minimum corporate tax rate of “at least 15 per cent” on foreign earnings and paves the way for levies on multinationals in countries where they make money, instead of just where they are headquartered.
The G7 countries said that the new deal is aimed at modernising the century-old international tax code and cools transatlantic tensions that threatened to spill into a trade war under Donald Trump. But key details are still to be nailed down, more nations must sign on, and full implementation could take years.
In its statement, the government said that the public would have taken note that the leaders of the G7 nations agreed to endorse calls to reform the global tax system.
“The discussion on reforming the international taxing structure for multinational entities is being directed by the 24 member OECD/G20 Steering Group of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
“These discussions have been ongoing since 2018. The Bahamas has been an active participant in the process. Not only is The Bahamas a member of the Inclusive Framework on BEPS, but the country also has representation on the Steering Group with the election of Stephen Coakley Wells of the Ministry of Finance to the Steering Group, last year.”
But the government said, notwithstanding agreement by the G7, the framework proposed by the Steering Group will require the consensus of the 139 countries of the Inclusive Framework on BEPS before going on to the G20 finance ministers for ratification later this year.
“The Ministry of Finance is conducting an assessment of the impact of these proposals and what implications they may have for the domestic tax regime of The Bahamas. The Bahamas reasserts its sovereign right to determine the tax structure best suited for the ongoing development of the country.
“Nonetheless, the ongoing multi-lateral discussions are timely given the recent announcement by the prime minister in the budget speech regarding the ministry's imminent comprehensive tax study. The output of this in-depth, empirical assessment will inform ongoing tax reform efforts in pursuit of greater fairness and equity within the country's tax regime.”
The government said it will continue to remain proactive to shape a position that ensures that our financial sector remains competitive and dynamic.
“Through the country's representation on the Steering Group, the government will ensure that the positions of no/nominal tax jurisdictions like The Bahamas are ventilated and considered.
“At the same time, the government will work with industry stakeholders to ensure that the jurisdiction is poised to take advantage of whatever opportunities arise from any changes to the international taxation architecture,” the Ministry of Finance added.