Canadian companies have an added incentive to set up regional headquarters in The Bahamas thanks to a new Tax Information Exchange Agreement signed on Thursday, June 17, 2010.
Signatories to the TIEA were Mr. Symonette and His Excellency Stephen Hallihan, High Commissioner for Canada to The Bahamas, in a ceremony at the House of Assembly Majority Room.
It was the 22nd tax information exchange agreement signed by The Bahamas; 16 with Organization for Economic Cooperation and Development countries and 9 with members of the G20 countries. This one is a little different in that it contains elements similar to that of a double tax agreement which nations with income taxes generally sign.
“Signing the TIEA, Deputy Prime Minister Brent Symonette said: ‘Once this agreement enters into force it will extend exempt surplus treatment to dividends paid to a Canadian parent corporation by its foreign affiliates resident and carrying on business in The Bahamas, allowing such dividends to be exempted from tax in Canada’” (The Bahamas Weekly).
The new Agreement is one of many longstanding economic links between The Bahamas and Canada, and is one of the best in terms of providing reciprocal economic and trade benefits, particularly in financial services, tourism, construction and the hospitality sectors. It also places the country on equal footing with Barbados in terms of “double tax” benefits.
Currently, major Canadian-owned banks, especially FirstCaribbean, have their regional headquarters domiciled in Barbados, largely because of that nation’s “double tax” treaty with their homeland. The treaty ensures their profits are only taxed once – at the lower Barbadian rate – rather than at the higher Canadian thresholds, and has acted as a major draw for Canadian companies seeking to do business in the region to establish their bases there. (The Tribune)
High Commissioner to Canada Stephen Hallihan said, “Canada is very pleased to be signing this exchange agreement with The Government of The Bahamas. It will, quite simply, make our taxation regimes more transparent, more effective and it will allow both countries to actually more effectively implement the tax systems that we have in place” (The Bahamas Weekly).
The Bahamas has previous Tax Information Exchange Agreements with the United States of America, Principality of Monaco, Republic of San Marino, United Kingdom, New Zealand, and People’s Republic of China, Argentina, the Netherlands, Belgium, France, Mexico, Denmark, The Faroes, Finland, Greenland, Iceland, Norway, Sweden, Spain, Australia, and Germany.
And, on the same day of the signing of the TIEA, the Bahamas financial services industry held a briefing for its members on the latest development and amendments to The Bahamas and United States TIEA Act and Regulations, namely:
- The International Tax Cooperation Act, 2010
- The International Tax Cooperation Regulations, 2010
- The Bahamas and the United States Tax Information Exchange Agreement (Amendment) Act, 2010
- The Bahamas and the United States Tax Information Exchange Agreement (Amendment) Regulations, 2010
The Government of The Bahamas’ expanding network for tax information exchange proves The Bahamas’ ability to benefit from the changing global regulatory environment and enjoy continued growth in its international business industry.