Double Tax Treaties
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 Bahamas' parliament.
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
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,” concluded
Other International Agreements
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.
In 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.
In 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
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
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 financing laws.
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 industry.
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
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 criminal activities.
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,”
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,”
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,” he added.
In 2002 the Bahamas was granted a six year term for
its Qualified Jurisdiction (QJ) status by the United
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 requirements.
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
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 privacy.
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," she stated.
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 Jurisdiction.
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
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 the IRS.