The Bahamas has committed to the automatic exchange of information for tax purposes on a bilateral basis with what the Ministry of Financial Services deems "parties who have demonstrated their ability to safeguard the information provided" beginning December 31, 2018. Former Attorney General John Delaney thinks it's the right move.
Initial statements out of the seventh Global Forum on Transparency and Exchange of Information for Tax Purposes, held in Berlin, Germany, from October 28-29, seemed to suggest that The Bahamas had signed a multilateral agreement called the Multilateral Competent Authority Agreement (MCAA), which deals with the automatic exchange of information (AEOI) for tax purposes.
Subsequent information from the Ministry of Financial Services made it clear that The Bahamas had not signed the MCAA - which would be, perhaps, out of character for the jurisdiction - but had instead formally adopted the Organization for Economic Cooperation and Development's (OECD) AEOI standard". The Bahamas will implement the standard through bilateral treaties with appropriate partners.
A status report on jurisdictions that have either committed to the standard or not will be presented to G20 leaders during their annual summit in Brisbane, Australia on November 15-16.
Guardian Business spoke with former AG John Delaney about the prudence of adopting the standard in the first place. He said it was "not surprising" that The Bahamas had done so.
"International trade in financial services is precisely that - international trade," Delaney said. "If The Bahamas is committed to it, in essence, we have to be online with generally accepted and prevailing international standards."
He said this was the commitment which underpinned the government's position in 2002 when it made the first commitment to the OECD. On the matter of The Bahamas adopting the standard but opting to employ a bilateral as opposed to multilateral approach, Delaney said:
"In my view that is the correct approach for The Bahamas to have taken. The multilateral exchange would just give too much of an opportunity for things to be controlled in a responsible manner... having regard to issues of confidentiality, data safeguards and proper use of the information."
He pointed to recent incidents of misappropriated or stolen data, saying that it is all too easy for information to be misused.
"While one agrees to share information in appropriate circumstances, it's important that in assessing whether to share it, that it's going to remain confidential, it's going to be used for the purposes for which it is being shared and that it's safely kept," Delaney said.
The bilateral route, he said, gives The Bahamas an opportunity to ensure that any counterpart jurisdictions are able to use the information for the purposes for which The Bahamas intends to share it.
As for why the MCAA might not be in character for The Bahamas, Guardian Business understands that what the MCAA does is facilitate a standardized framework for agreement among various competent or relevant authorities in each jurisdiction. This seeks to ensure uniformity of approach.
What The Bahamas actually committed to was the Common Reporting Standard, which contains the principles on automatic exchange. This means that a country does not have to sign the MCAA to implement AEOI. One country may come to an agreement with another outside of the framework of the MCAA, once that agreement adheres to the principles of the Common Reporting Standard.

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