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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: The Bahamas Second Round Review (2018)

This report for Bahamas, The has been published on 4 Apr 2018. You can browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The Bahamas’ legal and regulatory framework contains some deficiencies with respect to the identification of beneficial owner(s) of companies, which may result in the service providers subject to supervision by the Securities Commission or the Compliance Commission not always collecting information on all relevant beneficial owners in accordance with the 2016 ToR.  The Bahamas should ensure that its legal and regulatory framework requires all beneficial owners of companies to be identified in accordance with the 2016 ToR in all circumstances. 
Companies incorporated under the Companies Act and general partnerships are not required to keep beneficial ownership information or to engage a Bahamian service provider which would be required to keep beneficial ownership information under AML legislation. Although it is likely that the 10% of the 40 319 registered companies incorporated under the Companies Act that have been issued a business licence have engaged a Bahamian service provider, it remains unclear to what extent the other 90% of these companies have done so. It is noted that the number of these companies that have a substantial percentage (40% or more) of foreign beneficial ownership, is limited.  The Bahamas should ensure that a requirement to have beneficial ownership information available is in place in respect of all companies incorporated under the Companies Act and all general partnerships. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  The monitoring of compliance with requirements to keep legal ownership and identity information in respect of companies and partnerships is not comprehensive. The RGD (Registrar General’s Department) performs limited monitoring on companies incorporated under the Companies Act and no monitoring on IBCs and partnerships. Whilst under the AML framework indirect monitoring is taking place which ensures availability of legal ownership information on IBCs and exempted limited partnerships in most cases, it is unclear to what extent other companies and partnerships have engaged a service provider subject to AML obligations and are therefore indirectly monitored.  The Bahamas should ensure that its monitoring and enforcement powers are appropriately exercised in practice to support the legal requirements for the availability of legal ownership information on companies and partnerships. 
Where companies incorporated under the Companies Act and general partnerships only engage a Bahamian service provider which is supervised by the Compliance Commission, the availability of reliable beneficial ownership information is not ensured, as its supervision of compliance with AML obligations is not robust.  The Bahamas should ensure that an adequate mechanism to monitor the availability of beneficial ownership information is in place in respect of all service providers it may rely on. 
In 11 of the pending EOI requests received in the peer review period, the information was required to be available with one specific Bahamian service provider. However, this service provider stated that it was not in possession or control of the information because it was denied access by its foreign head office. The Bahamian authorities took more than one year to revoke the licence of this service provider, even though there were also other external factors (relevant information available in the public domain) giving rise to concern.  The Bahamas should enhance its monitoring and enforcement practice and be more pro-active in the case of external events affecting one or more Bahamian service providers. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  During the peer review period, the availability of accounting records was only effectively monitored in respect of trusts with a professional trustee licensed by the Central Bank and in respect of entities or arrangements with a business licence. Less than 10% of the entities and arrangements registered in The Bahamas had a business licence. In 2017 a monitoring mechanism was established in respect of IBCs and exempted limited partnerships, but its effectiveness cannot yet be assessed. It is also noted that there has been one case during the peer review period where accounting information was unavailable because the company had been struck off the register and the information was not kept in accordance with the standard.  The Bahamas should monitor the implementation of the accounting record keeping obligations in respect of all relevant entities and arrangements, including for entities that are struck off the register, and should ensure that its enforcement powers are sufficiently exercised in practice. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  The Bahamas has not used its compulsory powers during the peer review period, even though in a relatively high amount of cases (11 out of 88) non-compliance occurred and only one service provider was involved in all of those cases.  The Bahamas should apply its compulsory powers where appropriate in cases where information is not produced. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   A peer indicated that it experienced a delay of more than two years in negotiating a TIEA with The Bahamas, including for the reason that The Bahamas asked for the inclusion of provisions in the TIEA which are not part of the standard. It may be noted that this jurisdiction will be covered by the Multilateral Convention once ratified by The Bahamas but this does not mitigate the fact that the peer has so far not been able to send EOI requests to The Bahamas as desired.  The Bahamas should, expeditiously, enter into exchange of information agreements with all relevant partners, meaning those partners who are interested in doing so. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  The Bahamas has included information in its Notices to Produce Information which was not necessary for the information holder to produce the requested information. In more than half of the EOI requests received this happened without explicit agreement of the requesting competent authority.  The Bahamas should only disclose information from the EOI request as is necessary for the information holder to produce the requested information. 
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  The Bahamas has not consistently sent status update within 90 days of receipt of an EOI request where it was unable to provide a response within that timeframe.  The Bahamas should send a status update within 90 days of receipt of an EOI request in all cases where it is unable to provide a response within that timeframe. 
The Bahamas experienced delays in responding to EOI requests received, which are largely attributable to a temporary reduction in human resources during the peer review period.  The Bahamas should ensure that it sends timely responses to EOI requests received by its competent authority, and monitor that it maintains at all times sufficient resources to do so.