The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian financial services industry is hoping to start consultation on the proposed legislative regime for automatic tax information exchange by next month, as it bids to remain “the destination of choice” in the Western Hemisphere.

Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business that implementing the Common Reporting Standard (CRS) for automatic tax information exchange would not undermine this nation’s competitive position.

She based this on the fact that more than 90 countries, including the world’s most developed nations and the Bahamas’ international financial centre (IFC) rivals, had committed to the initiative, thus ensuring a ‘level playing field’.

And, while some have questioned whether the Bahamas can implement the CRS on a bilateral - as opposed to multilateral - basis, Ms McCartney said key IFC competitors such as Hong Kong and Singapore were also going this route.

“We are working along with the Government to ensure it’s in place by the end of the year,” the BFSB chief executive said of the Bahamas’ legislative and regulatory framework for implementing CRS. “A working draft being completed and an outline prepared.

“Once that is done, active consultations will begin. In an ideal world, that will begin in October.”

Ms McCartney said that following industry feedback, the Government and private sector were targeting year-end 2016 to have the framework in place and the accompanying legislation completed, if not passed.

“That is what the Government and industry are working on,” she added. “That’s our collective objective. There is a real commitment on both the public and private sector side to get this done in the shortest possible time.”

The Bahamas has given a commitment to the Organisation for Economic Co-operation and Development (OECD) that it will implement the CRS (and the automatic exchange of tax information) in 2018.

Hope Strachan, minister of financial services, yesterday said in a statement that she was “confident” the Bahamas will meet the 2018 implementation deadline, having made good progress to-date.

The Ministry of Financial Services is leading the CRS effort in conjunction with the Ministry of Finance, the Attorney General’s Office,the BFSB and other private sector stakeholders.

Legislation, regulations and guidance notes have already been benchmarked - both regionally and internationally - for the CRS implementation.

Ms McCartney said the Bahamian financial services industry’s preparation for CRS would only begin in earnest once the legislative and implementation framework was known, thereby giving it the ‘rules of the game’.

She added, though, that compliance with the US Foreign Account Tax Compliance Act (FATCA) had given the sector an idea of what to expect in terms of the processes and mechanisms involved in automatic information exchange.

The Bahamas will now have to do this with multiple countries, not just the US, and Ms McCartney said this nation had elected to implement this on a bilateral - country to country - basis rather than a multilateral one (dealing with all-comers).

“The Bahamas is not alone in going the bilateral route,” Ms McCartney told Tribune Business, pointing to Hong Kong and Singapore.

“We opted for this route because multilateral is geared towards developed countries with direct taxation. In the Bahamas, we don’t have those, and bilateral was more suited to our tax regime.”

Ms McCartney said the OECD’s Global Forum had approved the use of both bilateral and multilateral approaches for CRS implementation.

Mrs Strachan’s predecessor as minister of financial services, Ryan Pinder, in 2014 warned that implementing CRS on a multilateral basis would impose an impossible administrative and cost burden on small jurisdictions such as the Bahamas.

He also warned that it could expose the Bahamas, and its financial services industry’s clients, to nations where their tax information would be used improperly or shared with the wrong people. This, in turn, could jeopardise the safety and security of clients.

However, Ms McCartney said yesterday that all countries seeking to exchange tax information automatically with the Bahamas would have to meet the OECD’s data security and protection standards, thereby easing Mr Pinder’s concerns.