By NATARIO McKENZIE
Tribune Business Reporter
FINANCIAL Services Minister Hope Strachan said yesterday that the landscape of the country’s financial services industry would be strengthened as a result of the nation’s compliance with the tax information exchange agreements such as the US Foreign Account Tax Compliance Act (FATCA), saying that she was fairly satisfied that The Bahamas would be ready when the Act becomes effective in September.
The government has chosen a Model I IGA with the US Treasury for FACTA compliance. 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.
Speaking on the financial services industry’s preparation for the FATCA roll-out, Mrs Strachan told Tribune Business: “It’s fair to say that the process has proceeded fairly satisfactorily in terms of us being able to meet the timelines for FACTA implementation.”
Testing of the ‘portal’ through which Bahamas-based institutions must submit all necessary US client information began last month. All financial institutions were required to register with the portal by July 31, and complete their first filings - for the tax year to end-December 2014 - by Monday, August 17, with FATCA to take effect on September 30.
“For all intents and purposes it would seem that we are on target. We are foreshadowing that we will be ready come September 30,” Mrs Strachan said.
Under FATCA, US taxpayers holding financial assets outside the US must report those assets to the IRS or face penalties. 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.
Mrs Strachan said that the Bahamian financial services landscape would ultimately be strengthened through such tax information exchange agreements. “The landscape of the financial services industry is strengthened by the fact that we will continue to meet our obligations as far as our international and global partners are concerned,” she said. “This was a pretty huge undertaking for us and it speaks to our commitment and dedication to the sector that we were able to actually enter into the inter-governmental agreement with the US, recognise that we had to to pass legislation in order for us to be able to properly implement the terms of that agreement. We have recognised our responsibility to create a portal which would facilitate that reporting. I believe at the end of the day we are going to be stronger as a financial services jurisdiction.”
The minister noted that the country’s adoption of the Organisation of Economic Co-operation and Development (OECD) automatic exchange of information standard was also on the horizon. “We have the obligation for the automatic exchange of information, which we have signed on to for 2018. We have determined that we are going to take a bi-lateral approach. The job of the Ministry of Financial Services is to ensure that when that 2018 deadline reaches we are able to be compliant with that particular date.”