The European Union’s Economic and Financial Affairs Council has removed The Bahamas from its List of Non-Cooperative Jurisdictions for Tax Purposes.

In a statement released yesterday, the EU confirmed that The Bahamas has implemented the necessary reforms to meet the EU criteria on tax governance and cooperation on tax matters.

In a statement The Bahamas government said it welcomed this decision and the positive impact it should have on growth to investor confidence in the industry.

In March 2019, The Bahamas was placed on the EU’s Annex II “the greylist”. While different from the more serious Annex I “the blacklist” of the EU List of Non-Cooperative Jurisdiction for Tax Purposes, The Bahamas was still subject to ongoing monitoring by the EU with respect to the implementation of economic substance requirements.

With yesterday’s move, The Bahamas has addressed all of the concerns on economic substance, removal of preferential exemptions and automatic exchange of tax information.

“This news of our removal from the EU list affirms that The Bahamas takes its position as a global financial centre very seriously. Coming off this list was not an easy process. We engaged many stakeholders and executed a comprehensive strategy to not only address the EU’s concerns but also to defend the jurisdiction against recent attacks on the legitimacy of our financial services business,” said Deputy Prime Minister and Minister of Finance Peter Turnquest.

Over the past year, the government’s team of technical advisors has had several meetings with the EU’s Code of Conduct Group to engage in dialogue on the integrity of The Bahamas’ tax governance measures. Most of the discussions centred on the introduction of economic substance requirements for Investment Funds.

Minister Turnquest said: “The Bahamas has worked diligently to demonstrate its commitment at the highest political level to international standards on information exchange, tackling harmful tax practices and dismantling artificial tax structures. On behalf of the government, I thank the staff, agencies and industry stakeholders that worked so hard to achieve this result. Your support, encouragement and technical skills have been invaluable in this process and prove once again, we can rise to any challenge.”