Double Tax Treaties
Since the Bahamas do not levy direct taxes,
there are no double tax treaties between the
Bahamas and other countries.
March 2009, Bahamian Prime Minister and Minister
for Finance Hubert Ingraham reaffirmed the
Bahamas’ commitment to the OECD’s
standards of transparency and exchange of
information in a statement made before the
noting the Bahamas’ adherence to the
OECD standards on March 15, 2002, stated:
government is satisfied that much progress
has been made toward the establishment of
a ‘level playing field’ which
we sought in 2002. It is clear that the OECD
standards of transparency and exchange of
information are being accepted by OECD member
countries and by those non-member jurisdictions
which provide financial services similar to
those provided in the Bahamas.”
conversations with the Bahamas Financial Services
Board (BFSB), the Association of International
Banks and Trusts (AIBT) and the financial
services industry generally, Ingraham delivered
the following statement on behalf of the jurisdiction:
Bahamas notes significant recent progress
towards the adoption of standards on tax transparency
and information exchange set by the Organization
for Economic Co-operation and Development.
The Bahamas reaffirms its commitment recorded
in a March 2002 agreement between The Bahamas
and the OECD. The Bahamas recognizes significant
advances in commitments to broader application
of OECD standards of transparency. The Bahamas
is ready to negotiate and conclude appropriate
arrangements to accommodate these OECD standards.”
is the intention of the government to enter
into negotiations [on tax information exchange
agreements] as a matter of priority. There
are a number of outstanding requests for the
Bahamas to enter into agreements. Each request
will be considered on an individual basis,”
2013, the Bahamas had signed Tax Information
Exchange Agreements with 30 countries, including
the UK, Germany, France, China, Canada and
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Other International Agreements
Assistance Treaties: There are mutual
assistance treaties with the US, Canada and
the UK which include exchange of information
provisions; but fiscal information is excluded.
Disclosure is limited to criminal matters,
and tax evasion is not a crime in the Bahamas.
The Bahamian statute Reciprocal Enforcement
of Judgements Act 1924 allows Commonwealth
judgements to be enforced in the Bahamas,
but revenue matters are excluded.
June 2000 the Bahamas was placed on the FATF
blacklist of 15 jurisdictions having inadequate
defences against money-laundering, and the
US State Dept issued an 'Advisory' against
the jurisdiction. The Bahamas also figured
on the OECD's list of 35 offshore jurisdictions
offering 'unfair' tax competition. After the
government enacted a swathe of legislation
to improve its regulatory regime, the Bahamas
was removed from both lists.
August 2000 an amendment was made to the Evidence
(Proceedings In Other Jurisdictions) Act.
This now allows international investigators
to obtain details of local or foreign bank
account holders in The Bahamas under a considerably
wider range of circumstances than before.
bankers, and especially their lawyers, one
of the most vexed aspects of the '2000' legislation
is the extent to which it compromises banking
secrecy, and the duty of confidentiality which
lawyers and other professionals owe to their
clients. Prominent jurists even said that
the legislation conflicted with the Constitution,
and welcomed a Court of Appeal ruling in October,
2002, setting aside a judgement of the Supreme
Court under which the new legislation was
protected from constitutional review.
original application had been made by local
lawyers complaining that the new laws inappropriately
designated law firms as financial services
institutions, for the purposes of regulation
by the Financial Intelligence Unit (FIU).
Maurice O. Glinton and Leandra Esfakis, joined
by the Bahamas Bar Association, had claimed
that to the extent that the legislation subjected
"financial services providers" (including
lawyers) to routine inspection of their offices
and client lists, this placed the lawyer in
direct conflict with his or her sworn duty
to protect the clients confidentiality.
Supreme Court had sympathised with the litigants,
but felt bound by a previous case; the Court
of Appeal disagreed, and insisted that the
lawyers' application should be heard on its
merits. In fact, Canadian and British precedents
had already confirmed the lawyers' position,
and the Court of Appeal had little choice
but to agree.
local jurist, Dr Gilbert N M O Morris said:
"It does not mean that there will be
no money-laundering laws in these jurisdictions.
What it does mean is that we shall have more
intelligent laws, more amenable to our constitutions.
It will also mean that our BAR Associations,
Accounting Institutes, our Insurance Agencies
and professional bodies will have to get into
the game; putting resources into getting good
research and remaining well-informed and educated
on the cutting edge of these issues."
March, 2004, the FATF said it was pleased
by the Bahamas' progress on legal assistance
treaties. Attorney General Alfred Sears said:
"The executive director of the CFATF (Caribbean
Financial Action Task Force) informed me that
the Financial Action Task Force members are
generally pleased by the progress of The Bahamas
in dealing with judicial requests."
in early 2004, a Memorandum of Understanding
(MOU) was signed by director of AUSTRAC (Australia's
anti-money laundering regulator and specialist
financial intelligence unit) Mr Neil Jensen,
and the director of the Financial Intelligence
Unit of the Bahamas.
October, 2005, it was announced that the Bahamas
had been removed from the Financial Action
Task Force’s monitoring list of countries
with weak anti-money laundering or terrorist
Attorney General, Alfred Sears said that the
process of complying with FATF demands had
been lengthy and costly, but had led to mainly
positive changes for the islands' financial
Sears said the years of working to remove
the Bahamas from the FATF’s list has led to
the build up of a remarkable level of expertise,
and that the Bahamas' Director of Public Prosecutions
has been recognized by the FATF as “a specialist”,
assisting with the evaluation of other countries.
from New York City, Dr Gilbert NMO Morris,
who has been a long-time commentator on the
Bahamas' financial regulatory systems, suggested
that there was nothing significant in the
FATF’s decision to cease its monitoring of
the Bahamas. He said: “I would have found
it more interesting if The Bahamas - given
its long history in this industry – had ceased
its monitoring of the FATF”.
March 2009, The Bahamas and Canada signed
an Asset-Sharing Agreement, formalising an
arrangement to confiscate the proceeds of
drug trafficking, money laundering and other
of Foreign Affairs Brent Symonette and Denis
Kingsley, High Commissioner for Canada to
the Bahamas signed the Agreement for the respective
governments during a ceremony at the Ministry
of Foreign Affairs in the Goodman’s
Bay Corporate Centre on March 12.
agreement with Canada is symbolic of the excellent
relationship that exists between our two countries
and we look forward to continued collaboration
in these and other matters,” Symonette
March 1990, both governments entered into
the Mutual Legal Assistance in Criminal Matters
Treaty. This treaty facilitates the gathering
of evidence and intelligence in the investigation
and prosecution of criminal offences. It also
enhances the capabilities in the confiscation
of the proceeds of crime.
legal assistance treaties are concluded between
two countries for the purpose of gathering
and exchanging information in an effort to
enforce criminal laws and confiscate the ill-gotten
gains of criminal activity,” Symonette
the excellent cooperation that already exists
between the Bahamas and Canada with regard
to sharing such assets even in the absence
of a formal agreement, in 2001 our governments
commenced negotiations on an Asset Sharing
Agreement to formalise the arrangement,”
In 2002 the Bahamas was granted a six year
term for its Qualified Jurisdiction (QJ) status
by the United States.
decision to grant the six year term was made
on the basis of an IRS determination that
'Know Your Customer' rules in the Bahamas
are implemented to an acceptable standard
for the purposes of operating a Qualified
Intermediary regime, and will allow financial
institutions based in the jurisdiction to
benefit from reduced reporting and documentation
following the announcement, Minister of State
for Finance, James Smith welcomed the news,
explaining that the extended term of the status
will increase the feeling of stability and
certainty amongst financial service providers.
Bahamas/US Tax Information Exchange Agreement
January, 2002, the Bahamas signed an information
exchange agreement with the United States
in order to allow both countries to pursue
tax evaders and money launderers more effectively.
agreement, which followed the establishment
of similar arrangements between the US and
Antigua, Barbuda, and the Cayman Islands,
marked another step in the Bush administration's
campaign to clamp down on terrorist financing.
It allows the US Internal Revenue Service
to pierce stringent banking secrecy rules
in the Bahamas in certain circumstances.
in a retrospective of 2001 published in late
December, CEO and Executive Director of the
Bahamas Financial Services Board, Wendy Warren,
warned that the co-operation demonstrated
by the Caribbean jurisdiction in the international
fight against money laundering has not changed
the country's fundamental perspective on financial
Bahamas will continue to co-operate with all
who seek to fight money laundering, fraud,
international terrorism and other serious
crimes. At the same time, this does not diminish
the fundamental fact that The Bahamas is wedded
to the belief that law-abiding persons and
entities have a right to privacy and confidentiality
with respect to the conduct of their affairs,"
of the tax and information exchange agreement
(TIEA) between the United States and the Bahamas
came into effect on 1st January, 2004, giving
the latter the status of a permanent Qualified
US gave The Bahamas provisional QJ status
in 2000, but made an extension to the full
six years conditional on the Bahamas signing
a TIEA with the US before the provisional
period expired. This led to extensive negotiations
during 2001, which ended in the TIEA being
signed in January 2002.
TIEA is not, however, retroactive and only
applied on criminal matters from 1st January,
2004. Civil tax matters are covered by the
TIEA from 1st January, 2006.
to the US Treasury, once the Agreement became
effective with respect to requests for information
made in connection with civil tax matters,
it was consistent with the standards for an
exchange of information agreement described
in the Internal Revenue Code.
Code generally allows US taxpayers to claim
a tax deduction for expenses associated with
a convention held in certain beneficiary countries
with tax information exchange agreements with
the United States to the same extent as a
convention held in the United States.
beginning from 1st January, 2006, The Bahamas
has been considered part of the “North
American area” for purposes of determining
whether US taxpayers may deduct expenses incurred
in attending conventions, business meetings
and seminars in The Bahamas.
September, 2004, the Bahamas government announced
a decision not to enter into any more tax
information exchange agreements in the near
future. Said Minister of State for Finance
James Smith: “Until we have a level
playing field with regard to tax information
exchange we are not entering into any treaties
with other OECD members."
TIEA entered into with the United States has
sparked worry in the financial community that
the Bahamas has left itself at the mercy of
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