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WEDNESDAY, MARCH 28, 2018
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Corporate taxation won’t ‘put two fingers up to EU’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
T
he Bahamas does not need corporate taxation to escape its latest ‘blacklisting’, a KPMG tax expert yesterday saying: “That won’t put two fingers up to the EU.” John Riva, head of tax for the accounting firm’s ‘Islands Group’, told a seminar that the Bahamas needed to separate its immediate response to the European Union (EU) from potential tax reform (see other article on Page 1B) given that this is not needed to address the 28-nation bloc’s concerns. He instead argued that the Bahamas’ short-term focus needed to address ‘economic substance’, and the EU’s concern - used
* Expert: Tax not necessary to escape ‘blacklist’ * Calls on Bahamas to exploit ‘opportunity’ * And ‘set standard’ on economic substance to justify the ‘blacklisting’ - that this nation had not done enough to prevent its corporate vehicles from being used by multinational companies for tax avoidance purposes. The KPMG executive urged this nation to turn challenge into opportunity by requiring the ‘managing mind’ for Bahamian corporate vehicles to be domiciled in this nation, thereby ensuring they passed the ‘economic substance’ test and satisfied the EU’s demands. “You can’t introduce a corporate tax and put two
fingers up to the EU,” Mr Riva told assembled Bahamian financial services professionals, suggesting that tax reform was a longterm project that should prioritise this nation’s “There’s nowhere that says you’ve got to introduce corporate tax. This is all about having a legal requirement to have substance to do business in the Bahamas..... Nowhere does it say you’ve got to have corporate tax. “They [the EU] are saying that since you don’t have corporate taxation, it provides incentives for
non-residents to incorporate companies in the Bahamas, and since there are no legal requirements to have substance you can stick a load of profits in the Bahamas without having any substance in the Bahamas,” the KPMG tax head continued. “That’s what you’ve been charged with. What they want you to do to enable me to incorporate an IBC is I need to satisfy some form of substance test to do that. After that, I’m fine. If I fail the substance test, someone
SEE PAGE 6
A VIEW of the Baha Mar resort on West Bay Street.
Baha Mar’s lender needed ‘incentivising’ to finance completion By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BAHA Mar’s financier had to be “incentivised” through government tax breaks to compensate Bahamian creditors and finance the $4.2 billion project’s completion, it has been revealed. The revised Baha Mar construction contract,
* TAX BREAKS ESSENTIAL TO FINISH * CCA HAD TO TACKLE MOLD worth $700 million and tabled with the New York Supreme Court, discloses just how vital tax
SEE PAGE 8
Insurance chair EXPERT: CORPORATE TAX ‘IS A FIVE-YEAR PROJECT’ urges: We must shed * ‘Can’t be rushed in 9 months’ for EU * Is long-term reform tied to ‘vision’ ‘tax haven’ label * Economic impacts must be known By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Bahamas Insurance Association’s (BIA) chairman yesterday urged the country not to lose sight of ‘the bigger picture’ in using tax reform to shed its ‘tax haven’ label. Emmanuel Komolafe told Tribune Business that while corporate taxation
* EU BLACKLIST CAN’T BE ‘SOLE REFORM MOTIVATOR’ * MUST BE ‘UNDERPINNED BY BIGGER VISION’ * FINANCIAL SECTOR MODEL MUST ‘WITHSTAND’ SEE PAGE 4
Bahamas urged to talk with EU over IBC ‘grandfather’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas was yesterday urged to negotiate a ‘grandfathering’ clause with the European Union (EU) over the 20-year tax exemptions for existing IBCs. Paul Riva, KPMG’s head of tax for its ‘islands group’, including the Bahamas, suggested that the
* CHANGES HIT 20YEAR TAX INCENTIVE GUARANTEE * NATION NEEDS ‘STRONG LEGAL ARGUMENT’ * ASSESS STAMP DUTY ON IBC SHARE SALES EU would be open to such
SEE PAGE 7
A KPMG tax expert yesterday warned that a Bahamian corporate tax is “a five-year project”, adding: “You can’t rush it in nine months.” John Riva, head of tax for the accounting firm’s ‘Islands Group’, told local financial services executives that the introduction of such taxation needed to be bound to “a vision” of what this nation wanted its financial services industry and economy “to look like in five to 10 years”. Addressing a breakfast seminar, Mr Riva said it
was both unnecessary and impossible to property implement corporate taxation in the nine months before the Bahamas has to meet the European Union’s (EU) anti-tax avoidance demands. Emphasising that the EU was not requiring this of the Bahamas, the KPMG executive said such far-reaching tax reform needed to be accompanied by a proper analysis so that its full economic impact
was understood prior to implementation. “You cannot introduce corporate taxation unless you have a vision,” Mr Riva warned. “You need to have a vision of what financial services, your economy, will look like in five to 10 years. “You are not going to introduce a corporate tax in nine months. No one will make you ever do that..... If you are going to introduce corporate taxation, you do it for your long-term
economic vision, map it out and understand the economic impact of doing so. “You do not rush it in nine months. This is a five-year project so that businesses can manage their expectations and deal with it.” Mr Riva explained that Bahamian businesses would want absolute certainty on tax type, rate and timing among other details, as they
SEE PAGE 5