A local attorney has dismissed the Ministry of Financial Services as a "window dressing ministry", charging that the country's flagging financial services sector is being further held back by slow legislative reforms and difficulties shaking off the country's tax haven reputation.
During an appearance on Guardian Talk Radio 96.9 FM's "Let's Talk Live" with host Carlton Smith, Dominion Management Services Ltd. President Paul Moss questioned the Ministry of Financial Service's effectiveness in combating international stigmas associated with The Bahamas' financial services sector, stating that "The Bahamas must open itself up to transparency".
"The Ministry of Financial Services is really what I would call a window dressing ministry. It is not a ministry that has its base in law. It is all under the Ministry of Finance and therefore is subject to the decisions made by the substantive minister.
"The Bahamas today is still known as a tax haven. We still trade off of that basis that we are a tax haven... That doesn't work anymore. In fact, it has a negative impact on The Bahamas," he said.
In June, The Bahamas was slapped with a European Union (EU) blacklisting as part of the EU's crackdown on corporate tax evasion and efforts to end "sweet deals" for multinational companies.
The move was condemned both by the Ministry of Financial Services and the Organisation for Economic Co-operation and Development (OECD). Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, vouched for The Bahamas, labeling the blacklisting as "unfair" and stated that the OECD is "extremely happy" with The Bahamas' efforts in bolstering transparency within the financial services sector.
The Ministry of Financial Services has expressed its intent to fight the blacklisting, which impacted many other smaller Caribbean jurisdictions. Moss pointed to The Bahamas' lack of double taxation agreements with other countries as an example of the local financial services sector's failure to keep abreast of other jurisdictions vying for international business. He claimed this has deterred international clients from doing business in The Bahamas in his personal experience.
"We know that we don't have double taxation agreements with countries around the world... We're talking about policy changes that must take place at the ministry level. The reality is that I'm not sure... that the persons who comprise that industry have the outside understanding of what is going on in the world," Moss said.
Double tax agreements are typically signed between two countries to avoid or cut down on territorial double taxation of the same income by the two countries. However, CFAL President Anthony Ferguson defended the Ministry of Financial Services, telling Guardian Business that the ministry did "a fairly decent job" in representing the interests of the sector. Ferguson further stated that the root causes of local contraction in the sector are largely outside of the ministry's control as global financial institutions recover from the financial crisis of 2008.
"I don't think it's a waste of money. I think the Ministry of Financial Services is the conduit between The Bahamas and the outside world in terms of promotion of The Bahamas as a financial jurisdiction. So I think the Ministry of Financial Services does perform a very relevant service at this particular time, given the global issues created through all of the regulatory changes," said Ferguson.
"Can there be more focus and consistency in their advisors? Absolutely. We had start and stop... so you had personnel who were not consistently familiar with what's happening globally," he added.
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