Thursday, October 17, 2013
Thursday, October 17, 2013
As international momentum grows for multilateral agreements on automatic tax information exchange, Minister of Financial Services Ryan Pinder says he is convinced that The Bahamas will not only maintain, but also grow its financial services sector.
He made the remarks during the 8th annual Nassau Conference held Wednesday at the British Colonial Hilton under the theme: “The shift has occurred. How are you positioned?”
A key linchpin in the government’s overall economic initiative is the continued growth and development of the nation’s second largest industry, financial services, he said.
The Bahamas, however, is under constant pressure to evolve in the face of ever changing industry and international compliance standards.
“Gone are the days of The Bahamas competing against Cayman and Isle of Man,” said Pinder, who spoke on trade and tax at the conference. “The shift has meant that The Bahamas must now compete against New York and Geneva.”
For Pinder, a professional tax attorney, the last 20 years has shown that clients do business with this jurisdiction for some key reasons.
“The answer is not what some in the international arena would have us believe,” he said.
“Our clients are not coming to The Bahamas because of what has now become irreverent terminology–words like ‘secrecy’ or ‘tax minimization.'”
Rather, Pinder said, clients come for a host of special assets the jurisdiction offers.
According to the Minister, these selling points include sovereignty; sensible, flexible regulation; and government and regulators’ commitment to ensuring that The Bahamas remains “top in class” with respect to international standards and commitments.
Perhaps a more important selling point, Pinder added, is the close collaboration between the private sector and the government, which fosters the right environment to introduce new legislation and create new products to grow the sector.
“It makes no sense to drive this ship from the top down,” he said. “It is imperative that my Ministry is in tune with industry to understand its needs and wants.”
Referencing recent G8 and G20 meetings and the declaration to create a new single global standard for automatic exchange of information by February 2014, Pinder recognizes that the international community is speaking with “a thunderous voice.”
“The question remains whether it can be practically achieved.”
“What is proposed is a multilateral attempt between governments to achieve what the United States is attempting to achieve through the private sector,” said Pinder, referring to the imminent introduction of the Foreign Account Tax Compliance Act (FATCA) next year.
“If the international community is successful in this regard, which I personally have my own doubts, then tax compliance and reporting will drastically increase.”
He added: “Imagine extending what you have been putting in place to all G20 countries, an impractical measure for sure.”
Still, Pinder believes that The Bahamas is in the best position to take advantage of the changes in tax policy due to the aforementioned selling points.
“It is these assets that will cause us to prosper and advance, and especially in the context of trade, and particularly trade in services,” he said.
Unlike regional competitors, the Financial Services Minister said The Bahamas is not a commodity jurisdiction.
“We don’t pride ourselves on having the most companies on our register, or the most funds in the jurisdiction,” he said. “What we do pride ourselves on is that we have the most diversified operating entities in all sectors of the financial services industry.”
This jurisdiction, he said, values substance over form.
“The Bahamas, a country of substance and credibility, is perfectly positioned to link the developments in tax policy adjustments to trade in services.”
“We have done it for decades, and it is only going to grow as a result of the multilateral tax initiatives.”
Openness to trade and to international partnerships created the centre, added Pinder, and that continued openness will sustain and propel the centre.
The Minister emphasized the government’s commitment to working closely with the international agencies to shape “a sensible approach” for ensuring tax compliance. One that will respect credibility and diversity of industry.
“We are committed to not only adhering and meeting international regulatory requirements, but also to participating in their design,” he said. “The Bahamas is well positioned … for significant growth in the industry.”