TALKS will soon be held with the European Union (EU) to remove Bahrain from its list of alleged tax haven countries.
Bahrain’s Embassy in the UK strongly objected to the EU’s decision to include Bahrain on its list that was released on Tuesday.
In a statement issued yesterday, the embassy listed a series of steps taken, which contradicts the EU’s arguments for listing Bahrain on its first ever list of 17 countries.
The EU finance ministers adopted the tax-haven list, which also included the UAE and Tunisia, in a step to counter worldwide tax avoidance.
“Bahrain will initiate dialogue with the EU on this matter to ensure understanding and recognition of the kingdom’s efforts to ensure financial transparency, international co-operation and a robust regulatory environment,” said the embassy.
The list follows the leaking of the Panama Papers and the Paradise Papers, revealing how companies and individuals hide their wealth from tax authorities around the world in offshore accounts.
Other countries on the list are American Samoa, Barbados, Grenada, Guam, South Korea, Macau, The Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, and Trinidad and Tobago.
According to the EU statement, Bahrain’s inclusion was due to it not covering all EU member states for the purpose of automatic exchange of information; having apparently not signed and ratified the Organisation for Economic Co-operation and Development’s (OECD) Multilateral Convention on Mutual Administrative Assistance as amended; facilitating offshore structures and arrangements aimed at attracting profits without real economic substance; not applying the Base Erosion and Profit Shifting (BEPS) minimum standards; and not committing to addressing these issues by December 31, 2018.
“Bahrain strongly believes that it cannot be considered a tax haven as it is globally recognised for the strength and transparency of its financial regulatory infrastructure,” explained the embassy.
“Contrary to the EU statement, on June 29 Bahrain signed both the OECD convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement, allowing Bahrain to collect information from its financial institutions and automatically exchange that information on a yearly basis with its fellow convention and MCAA signatories.”
This will be ratified once both the convention and MCAA have been approved by the National Assembly, a process which has already commenced, added the embassy.
“As part of the continuing Common Reporting Standard (CRS) initiative Bahrain has already communicated to the Global Forum on Transparency and Exchange of Information its intention to exchange tax information automatically with all EU member states,” it said.
“Furthermore, on December 5, the Bahrain-US FATCA Inter-Governmental Agreement was approved by the National Assembly, whilst Bahrain has signed 51 bilateral tax treaties which allow for exchange of information for tax purposes.
“Included in these treaties are 17 treaties with EU members, several of which have already been used to request information from Bahrain.
“Bahrain is also an active member of the Global Forum on Transparency and Exchange of Information and it strives to ensure that it co-operates fully with its tax treaty partners and fellow Global Forum members, many of whom are EU member states, to ensure a full and fair exchange of information for tax purposes.
“Moving forward, Bahrain will commit to be a member of the Inclusive Framework on BEPS which brings together more than 100 countries and jurisdictions to collaborate on the implementation of the OECD/G20 BEPS Package.”
Meanwhile, Reuters reported on Bahrain’s intention to join a group of countries in their fight seeking to be taken off the list.
“Bahrain will commit to be a member of the Inclusive Framework on BEPS,” it cited the Finance Ministry.