The Bahamas Financial Services Board (BFSB) and the Association of International Banks and Trust Companies (AIBT) have published a joint letter calling for the government's proposed minimum 15% global corporate tax to be revisited, as it 'infringes on sovereign nations' autonomy to establish and manage their own tax systems'.

The industry call comes as the Bahamas government is set to release draft legislation implementing the tax at the end of May 2024, with a view to introducing a Bill to parliament later in the year following further consultation.

The joint BFSB and the AIBT letter dated 14 March  argued that it was irrelevant if the tax rate was "0 percent or 15 percent" so long as corporate entities were doing real business and abiding by key rules.

The Tribune reported that the letter, signed by Niekia Horton, the BFSB's chief executive and executive director, and Bruno Roberts, the AIBT's chairman, said the focus should be placed on establishing common "substance/presence rules" to ensure corporate entities are doing real business in the territories where they operate.

They also called for uniform "transfer pricing rules", so that multinational groups cannot avoid/evade their tax obligations in one jurisdiction by transferring funds to a subsidiary located in another country through purporting to purchase goods or services from it.

The joint BFSB/AIBT letter, which was copied to Ryan Pinder KC, the attorney general, in his capacity as The Bahamas' and Caribbean representative on the UN committee, effectively argued that focusing on establishing a uniform tax system and rate for all countries as a counter to avoidance and evasion by large multinationals was misplaced and would eliminate tax competition between nations.

"Revisit the minimum global corporate tax requirement, as it infringes on sovereign nations' autonomy to establish and manage their own tax systems," the two largest advocacy groups in the Bahamian financial services industry argued.

"Alternatively, international tax rules should focus on substance presence rules and standardised transfer pricing rules to prevent tax evasion through profit shifting. If entities operate in substance and form within a country, that country's tax rules should apply, whether 0 percent or 15 percent."