Martella Matthews

Guardian Business Reporter

martella@nasguard.com

Enactment of a Tax Information Exchange Agreement (TIEA) Bill will help to boost the tourism industry by allowing United States taxpayers to deduct Bahamian convention expenses from their taxes, parliamentarians heard Wednesday.

Debate on the TIEA, designed to facilitate the exchange of information necessary for the administration of Bahamian and United States tax systems was opened by Attorney General and Minister of Education, Alfred Sears.

Urging passage of the legislation, he said the Act would fulfil an obligation made to U.S. authorities in 2002 by the Free National Movement administration.

He credited the FNM Government for gaining provisional status as a Qualified Jurisdiction (QJ) for The Bahamas in 2000, following intense lobbying by the financial services sector.

"In credit to the previous government, in mid 2000 the IRS (Internal Revenue Service) granted The Bahamas a two-year provisional status," Mr. Sears said, "and it is interesting to note that in 2000 the financial sector heavily petitioned the government to obtain the qualified jurisdiction status in order to remain competitive in the financial services arena."

QJ status was also important to the many resort properties in The Bahamas, including Atlantis, Mr. Sears continued, as it would also make the country a more attractive convention destination, allowing United States convention delegates attending conferences in The Bahamas to claim tax exemptions.

Michael Halkitis, permanent secretary in the Ministry of Finance said that although some might find the Bill intimidating, specific guidelines would prevent any abuse.

While working in the financial services industry, he said, he also had concerns relating to the possibility of the United States attempting to conduct "fishing expeditions" to obtain information beyond the terms of the agreement.

It was brought out that requests for information under a TIEA would be narrow, focused on individual taxpayers, and based on facts that suggested that the taxpayer was evading taxes.

Any request made would have to: Specify the name of the U.S. tax payer; the tax period in question; the nature of the information being sought and its relationship to the tax period; the person and location of the information in The Bahamas, and a declaration that the information was relevant or material to the administration of a criminal tax matter for any request received prior to the first of Jan. 2006 and for both criminal and civil matters after the first of Jan. 2006.

The Bahamas would only have to comply with the request if the information requested was located in The Bahamas.

Once it was satisfied that a properly constituted request was received, the Minister of Finance, the competent authority for The Bahamas in the administration of this Act, would issue a notice to the relevant person having custody of the information to specify how the information was to be provided.

It was further explained that the Minister of Finance could either conduct an examination or request the supply of documents.

If an examination was indicated, evidence could be requested under oath, and refusal by any person to comply with any request of the examiner appointed by the minister would be regarded as an offence.

If there were objections to particular questions presented by the examiner or to being questioned in general, a person could refuse to answer, but the grounds for refusal must be stated and would be set out as part of the deposition.

The examiner could then refer the objection to the Supreme Court of The Bahamas for a decision.

The Act would also provide the minister, on proper warrant obtained from a magistrate, the freedom to enter premises and search and seize articles or information to prevent the commission of an offence that would compromise the investigation.

In circumstances where continued access to the seized articles was necessary for the conduct of a business, the minister would be obliged to allow such access.

Caption:Attorney General,

Alfred Sears

Posted: Thursday December 11, 2003