Brent Symonette, Minister of Financial Services, Trade and Industry and Immigration. Photo: Terrel W, Carey Sr/Tribune Staff
By KHRISNA RUSSELL
Deputy Chief Reporter
FINANCIAL Services and Immigration Minister Brent Symonette said yesterday the government “shot the winning goal” with the passage of the Commercial Entities Amendment Bill 2019 in the House of Assembly.
The government speedily passed the amendment in the lower chamber with Mr Symonette telling members the government has to meet a deadline with the European Union for the changes to be made.
The Bill amended the Commercial Entities Act of 2018 to better facilitate and enable the reporting of all entities described within the Act.
While it came into force last year, the changes recommended by the EU’s code of conduct group only came about after the Bill was already tabled and while it was being debated.
On Wednesday, The Bahamas was named as a “high risk” jurisdiction for financial crime by the EU on the basis that it is among those nations currently being monitored by the Financial Action Task Force (FATF) for “deficiencies” in its anti-financial crime defences.
The change in law directly affects EU matters and will not have any bearing on The Bahamas’ blacklisting on Wednesday which concerned the Financial Action Task Force, The Tribune was told.
“We think we’ve got to the point where the code of conduct and the EU will accept what we are trying to do,” Mr Symonette told the House yesterday. “We have levelled the playing field with our partners whether it be Bermuda, Cayman or the others and we think we are where we need to be.
“There is constant goal post moving, but we think we’ve shot the winning goal on this one. We will know toward the end of the month, the middle of next month whether our works have been successful.
“We are led to believe by the persons who make the recommendations that we’ve done all we have to do and will be looked at favourably and will be approved,” Mr Symonette also said.
Elsworth Johnson, state legal affairs minister, further explained what the amendment means for The Bahamas.
“Where we are today we did not just arrive here,” he said. “This bill is as a result of further comments made on the law we passed in 2018 and reflects changes suggested by the European Union’s code of conduct group.
“The group had concerns about certain provisions in the law that are largely concerned with the definition of tax residents, proof of tax residents and certain carve outs from the limitations on what is called outsourcing particularly in favour of accounting firms.
“The amendments in some cases take The Bahamas to the same level as competing jurisdictions who are also the subject of this process.
“Other jurisdictions have imposed the substance requirements on non-company business arrangements such as commonwealth partnerships and other forms of limited liabilities and exempted liability partnership. This amendment takes The Bahamas to the same level as other jurisdictions.
“However, as the amendment defines tax residence in The Bahamas so that any entity company or partnership, which is wholly beneficially owned by someone who resides and is domiciled by The Bahamas or which is owned by an annual or permanent resident or who physically lived in the Bahamas for at least three months in every calendar year, companies or partnerships owned by ordinary residents are not included entities and so do not have to comply with the Act.”
He continued: “The amendment also removes certain carve outs from the restrictions from outsourcing particularly in the favour of accounting firms. No competing jurisdiction has a similar carve out and the code of conduct group had grave concerns about such blanket carve outs.
“Lastly the amendments in this bill will require competent authorities spontaneously to report the tax jurisdictions of beneficial owner or any other entity, which engages in intellectual property activity such as charging royalties or licence fees for use of patented or trade mark properties or products. These royalty fees are considered to be the subject to tax avoidance abuse.”
Mr Johnson said the issue of spontaneous reporting was only raised after the Bill was tabled and while it was being debated so it could not be added to the Bill because it was only raised at the last minute.
“Last week the attorney general and a delegation travelled to Brussels. As a part of this mission he also met with the code of conduct group. In agreeing to advance the amendments the Attorney General received assurances that these amendments, the code of conduct group would be able to make a positive recommendation on behalf of The Bahamas.
“The process is explained that firstly it is a technical evaluation not a political decision and that is the process as to whether or not The Bahamas would be included or excluded from any listing. Once the laws pass the technical evaluation a positive recommendation would likely be made to the EU,” Mr Johnson said.