By NATARIO McKENZIE
Tribune Business Reporter
The Government is awaiting release of a detailed second Intergovernmental Agreement (IGA) model by the US before it decides how the Bahamas, and its financial services sector, should comply with the Foreign Account Tax Compliance Act’s (FATCA) reporting requirements.
Ryan Pinder, minister of financial services, in his remarks at the Bahamas Financial Services Board’s (BFSB) FATCA symposium, said that while FATCA was primarily a private sector issue, the Government had a responsibility to determine the best method by which client, tax-related information is to be transmitted to the Internal Revenue Service (IRS) .
“We know that the US Treasury Department has released a Model I Intergovernmental Agreement based on the agreement the United States reached with the EU five,”he said.
“We anticipate a Model II Intergovernmental Agreement based on the agreement reached with Switzerland. Like many of our regional competitors, we wait the release of this Model II agreement before making any statements on conclusions.
“It is not anticipated that a government will be able to conduct significant negotiations to deviate from the respective models of InterGovernmental agreements, [but]there will likely be some negotiation.”
Mr Pinder told Tribune Business: “We have committed to doing extensive industry consultation, both on the level of preparedness and the industry’s opinion on Inter-governmental Agreements. It’s a decision of government, but not one that’s going to be made without industry consultation.
“We wait for the model II agreement to be released by the United States. It’s very difficult to be able to affirmatively take a position on whether the country is going to sign, and which model it’s going to choose.
“Without a model II agreement from the Treasury Department it’s hard to make an assessment on which agreement is in the best interest of the Bahamas, both for the Government and private sector. We take the issue very seriously. We’re proceeding and taking a very reasoned approach.”
Mr Pinder reassured that the Government’s decision would be based on careful analysis, and thorough consultation with the private sector.
“I will not be forced into reckless or premature comments. This is one of the most important issues facing the financial services industry today, and in making the decision on which course of action the Government will pursue in reporting, we will treat it as such,” said Mr Pinder.
“We’re an independent country and we can make our own reasoned decisions that are in the best interests of the country, and the best interests of the industry, whereas some of our competitors are not independent and are subject to the will of other countries. That puts us at an advantage, I think, to be able to make the best decisions for our industry. We have already started soliciting some proposals from advisors to see the level of preparedness and the expectation as it relates to an Intergovernmental Agreement.”
Mr Pinder said the private sector must be committed to put in place the necessary platforms and programmes in place to be FATCA compliant.
Regarding the industry’s level of preparedness for FATCA compliance, Mr Pinder said: “I think that we have the tools and the expertise to put it in place. We have compliance officers here that are second to none in the world. We are optimistic in that regard.
“We have to keep driving it home to the private sector that we have to get ready, this is coming; it’s not going away. Yes, there may be delays here and there, but it is important that they put due diligence and compliance platforms in place.”