This country is facing a number of economic challenges but the international business sector is particularly under pressure, and yet there is no question that there is a demand for such financial services.
The industry has flourished in The Bahamas, Bermuda and in the Caymans as no-tax jurisdictions. So also in the British Virgin Islands; the latter being a jurisdiction which, like ours, raises small rates of tax backed by a treaty network.
Right now, there are challenges to our sector from both sides of the Atlantic. From the United States we have been grappling with FACTA (Foreign Account Tax Compliance Act) and the other reporting requirements designed to assist the American revenue authority, the IRS, in collecting taxes due to the United States Treasury.
The British are looking at their tax rules and at tightening the law as it relates to offshore income. The Government now wants the power to prosecute anyone found to have undeclared foreign income. Such persons would now have to prove that they did not intend to evade taxes.
There has always been consensus that it was acceptable for individuals to engage in legitimate tax planning on an international level, and many major businesses across the world have utilised offshore jurisdictions, like this country, to plan their lawful business transactions.
Yet, within very recent times, some of these major corporations have been attacked in the British Press and in Parliament because they have done nothing more than engage in legal but aggressive business financial planning.
As a compromise, some of them have entered into tax paying arrangements in the wake of the outcry.
This is a matter that concerns us, because we have always been interested in attracting business which is legitimate and above board and which seeks to use our double taxation treaties for efficient tax planning, and in keeping with the law and with the exchange of information.
It would seem that even if the transactions comply with accepted legal standards, they may be challenged. This might dampen demand to set up offshore companies at a time when our economy faces renewed challenges.
We cannot rest on our laurels; for having lost the Canadian tax advantage that we once singularly enjoyed, we must be alive to these new challenges.
Money and finance are major growth industries in the modern world, and the speed with which money is generated together with the skill and creative ingenuity used to create customised tax efficient financial instruments makes this an industry ripe for creative business planning within the usual rules.
Faced with the constancy of challenges to its existence, the birth of a centre of excellence for the study of our offshore sectors recently agreed between Bahamas and ourselves is a timely step. Jobs and foreign exchange are at stake.
The centre should help us to uncover what we need to know and to do for the efficient and proactive growth of this sector which is technical and fast-moving.
