NASSAU,
Bahamas -- The Ministry of Financial Services is doing everything necessary to
ensure the full compliance of The Bahamas with established international norms
and standards, as the Ministry prepares the country to be ready to comply with
the United States Foreign Accounts Tax Compliance Act (FATCA).
The
Ministries of Financial Services and Finance hosted an industry briefing on
FATCA to highlight The Bahamas’ progress on readying itself and the financial
industry for compliance with the Act on
Thursday, April 16, 2015, at the
British Colonial Hilton.
Minister
of Financial Services the Hon. Hope Strachan explained that FATCA was brought
into law in the United States in 2010 through the U.S. Hiring Incentives to
Restore Employment Act, and its implementation marked a major change in the
“rules of the game” for international tax cooperation.
“This
U.S. law, which has at its core, the penalty of a 30 per cent withholding for
financial institutions that do not comply with the rules of FATCA in U.S.
markets has resulted in countries around the world enacting new policies and
procedures to protect their financial institutions.”
Minister
Strachan said The Bahamas Government recognised the tremendous importance of
ensuring unfettered access to the U.S. financial markets for The Bahamas’
financial services industry. “Therefore,
inaction was not a possibility in order to ensure continuity of financial
services.”
She
added that the Government agreed to require its institutions to establish
certain due diligence procedures to identify U.S. persons and the accounts they
hold in order to transmit information on those accounts to The Bahamas
Government which would be shared with the U.S. Government on an annual basis.
She
said the Ministry of Financial Services was charged with the task of
spearheading the implementation of FATCA for The Bahamas.
“Through
bold and aggressive engagement with the U.S. Treasury Department, the Ministry
was able to negotiate significant ‘wins’ for the Bahamian financial services
industry in the ‘trustee document trust’ exemption and in certain exemptions to
the ‘sponsored investment entity’ category.”
The
Minister added that these exemptions eventually became standard in all FATCA
agreements, but The Bahamas should be very proud that these issues were
negotiated by The Bahamas Government during the FATCA workshop held in The
Bahamas in 2013.
She
said the Government has also committed considerable resources, through its
partnership with Ernst and Young, to developing an automated system to collect
the required information and to ensure that the Competent Authority in the
Ministry of Finance was properly resourced to manage the system.
“Of
primary importance is the need to ensure the security of the data which we are
receiving, and to make the process as efficient as possible for our industry.”
Minister Strachan noted that FATCA is the start of the new
norm; and the global paradigm with respect to the expectation of transparency
is shifting, as evidenced with the Global Accounts Tax Compliance Act on the
horizon.
“However, my Ministry firmly believes that it is always
important to put forward the considered case of The Bahamas to the
international community and to remain engaged at the table on the international
financial sector policy issues. The Bahamas has developed a strong reputation for
leadership in international financial sector issues and will always strive to
remain at the forefront of complying with international best practices and
regulatory standards,” Minister Strachan said.