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.