The Bahamas has been removed from the European Union's watch list after being deemed fully compliant with the bloc's tax standards.
EU finance ministers made the decision this Tuesday, while at the same time adding the island's offshore rival the Cayman Islands to its blacklist of countries deemed to be noncooperative on tax matters.
"The move by the EU underscores The Bahamas' commitment to adhere to global regulations and international best practices as a premiere international financial centre," the BFSB and AIBT said in a joint statement.
The move by the EU underscores The Bahamas’ commitment to adhere to global regulations and international best practices as a premiere international financial centre"
"The decision acknowledges that The Bahamas has implemented all the necessary reform to address concerns regarding economic substance, removal of preferential exemptions and automatic exchange of tax information," the statement from the Bahamas Financial Services Board and the Association of International Banks & Trusts added.
The Bahamas was one of 16 jurisdictions that the EU determined had passed legislation to meet EU tax good governance principles.The British Virgin Islands and Bermuda were also removed from the grey list.
"Throughout the entire process of reform, The Bahamas has demonstrated commitment at the highest political level to ensuring that as jurisdiction we comply with international standards on information exchange, tackling harmful tax practices, dismantling artificial tax structures and prevention of financial crime which is critical to our value proposition as a well-regulated international financial center," the BFSB and AIBT also said.
Cayman was listed because investment funds based there do not reflect real economic activity on the British Overseas Territory, the EU said.
Alden McLaughlin, the premier of the Cayman Islands, said the EU decision was "deeply disappointing" because it did not consider changes on funds rules already passed. But he conceded the overhaul was enacted a few days after an EU deadline had lapsed.