The government yesterday pledged it will not be bullied by this weekend’s 15 percent minimum global corporate tax deal amid warnings that The Bahamas cannot afford to be “burnt” by any knee-jerk response
The Ministry of Finance, in a statement responding to the agreement announced by the G-7 (group of seven) finance ministers, indicated it was executing just such a measured approach by saying it was assessing whether there are any consequences for The Bahamas’ domestic tax system and international financial services industry.
It also said this country “reasserts its sovereign right to determine the tax structure best suited for the ongoing development of the country” in response to the pronouncement by the world’s most powerful economies that they have reached agreement on how to combat tax avoidance by major multinationals – especially those in the so-called “digital” economy.
The G-7’s finance ministers, unveiling an agreement that the German representative described as “bad news for tax havens”, said in an end-of-summit communique: “We strongly support the efforts underway through the G20/OECD inclusive framework to address the tax challenges arising from globalisation and the digitisation of the economy, and to adopt a global minimum tax…….
“We will provide for appropriate co-ordination between the application of the new international tax rules and the removal of all digital services taxes, and other relevant similar measures, on all companies. We also commit to a global minimum tax of at least 15 percent on a country-by-country basis.
“We agree on the importance of progressing agreement in parallel on both pillars, and look forward to reaching an agreement at the July meeting of G-20 finance ministers and Central Bank governors.” Much, though, remains to be done to implement this agreement worldwide, with low-tax European nations such as Ireland and Cyprus already voicing opposition to its trampling of a sovereign nation’s right to set its own taxes.
For The Bahamas, as a ‘no tax’ jurisdiction with zero history of personal or corporate income taxes, it is still unclear what impact this 15 percent global minimum corporate tax will mean – especially since there was a suggestion coming out of the G-7 finance minister’s meeting that countries will still be free to determine their own tax rates and systems.
However, if multinationals operating in The Bahamas pay zero taxes here, they will face the prospect of their home countries levying at least a 15 percent tax on profits and revenues repatriated from this nation to bring them up to the international minimum.
Article Credit: Tribune 242