Bahamas Urged To Amend US Tax Agreement

by Mike Godfrey, Tax-News.com, Washington

19 April 2011

A report by the Organization for Economic Co-operation and Development (OECD) has recommended that the Bahamas amend its tax information exchange treaty with the US to ensure greater power to access requested information.

The OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes published Phase One of its Peer Review Report on the Bahamas on April 14. The Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes.

The review was carried out between July, 2010, and March, 2011 and, according to the Bahamian government, received the active cooperation and participation of the Ministries of Finance and Foreign Affairs, the Office of the Attorney-General, the Financial Services Regulators and the Registrar of Companies.

According to the report, the Bahamas has been particularly active in its negotiation of tax information agreements (TIEAs). Government figures show that 23 new agreements have been concluded since September 2009, bringing the total to 24. A number of these are yet to come into force, but the Bahamas has completed all the necessary steps required of it for implementation.

Each of these 23 recently concluded TIEAs complies with the OECD Model TIEA. However, that with the US, which was the first to come into force, in 2004, does not comply. The report states that, by the TIEA's existing stipulations, the Bahamas lacks the power to obtain and provide information held outside the Bahamas, even in a case where the information is held by a person within its territorial jurisdiction.

Therefore, the report recommends that the Bahamas ensure it possesses the power to access information sought under its TIEA with the US, which is controlled by persons in the Bahamas, even if it is located extra-territorially.

Responding to the report, the Bahamian government announced that it welcomed the report, reiterating that the country's legal and regulatory system for effective tax cooperation was found to be fully compliant with all elements of the Global Forum's standards with the exception of one. In addition, the government stressed that it has noted the report's findings, and that the necessary remedial actions, including amendments to the relevant legislation to address the matters raised in the report, are being dealt with.

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