The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ decision to “work with change rather than fight it” has left this nation well-positioned to deal with FATCA and other global regulatory initiatives, an international tax planning expert said yesterday.

Steven Cantor, attorney and partner in the Miami-based Cantor & Webb law firm, told Tribune Business that leadership from both the Government and financial services industry itself had given the Bahamas a head start when it came to complying with the US Foreign Account Tax Compliance (FATCA) initiative’s demands.

He added that the issuing of timely, accurate information to the sector had also “set the Bahamas apart” from rival jurisdictions when it came meeting FATCA’s deadlines.

“They’re [the Bahamas] trying their best to become as compliant as possible,” said Mr Cantor, who has worked with the Bahamian financial services industry and its clients for decades.

“The great benefit you have here in the Bahamas is that you have a highly organised, highly responsive group of leaders in the financial services industry.”

Describing Ryan Pinder, minister of financial services, as “an excellent spokesperson on behalf of the Government” and “a real champion for the Bahamas and the offshore world”, Mr Cantor also praised the Bahamas Financial Services Board (BFSB), particularly its chief executive, Aliya Allen, and her predecessor, Wendy Warren.

“All have excelled, especially on how seriously the financial services industry takes compliance, and also understanding how one has to accommodate and work with change, rather than fight change,” Mr Cantor told Tribune Business.

The Bahamas has signed a Model 1 inter-governmental agreement (IGA) with the US Treasury as its preferred means of FATCA compliance.

Under the terms of the IGA, all Bahamas-based financial institutions will have to supply the Government with the required information on any US clients they have, with the administration then passing this on to the IRS/US Treasury.

“The first and most important thing is that the message has gotten out to the industry,” Mr Cantor said. “The accurate and clear message has gotten out there through your government.

“That alone sets the Bahamas apart from many other jurisdictions.”

FATCA, which was brought into law in March 2010, is a set of rules set out by the US Internal Revenue Service (IRS) designed specifically to limit tax evasion by US persons living abroad.

Under FATCA, US taxpayers holding financial assets outside the US must report those assets to the IRS or face withholding penalties of up to 30 per cent. FATCA will also require foreign financial institutions to report directly to the IRS certain information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.

The Government recently stated in a position paper to the OECD that to implement FATCA alone will cost between $4 to $10 million, with ongoing costs of over $200,000 per year.