The Ministry of Finance announced yesterday that it has moved to a new stage in the development and rollout of its Foreign Account Tax Compliance Act (FATCA) Model 1 Intergovernmental Agreement (IGA).
After a highly competitive bidding process, the government has awarded its FATCA project to EY.
In partnership with EY and Convey, a leading tax software provider, the Ministry of Finance will design and deploy the Bahamas FATCA solution, which will include a secure FATCA reporting system, the establishment of the Bahamas Competent Authority and a number of other elements to effectively manage compliance with FATCA Model 1 IGA requirements.
FATCA is a U.S. tax law that will take effect on September 30, 2015, requiring foreign financial institutions to report account information about their U.S. clients to the U.S. Internal Revenue Service (IRS).
The Ministry of Financial Services has been instrumental in leading the IGA initiative and preparation for the FATCA legislation. Together with the Office of the Attorney General, they will continue to be key stakeholders in the process going forward.
“In collaboration with EY and Convey, we are racing toward the finish line to successfully meet the September 2015 FATCA submission deadline,” said Michael Halkitis, Minister of State for Finance. “We are confident that by leveraging EY’s deep FATCA expertise and Convey’s technical capabilities we will have all of the key elements in place to set up the Competent Authorities Operating Model and implement the Model 1 IGA by this fall.”
“We are excited to work with the government of The Bahamas, the Ministry of Finance, Convey and other key stakeholders on this important initiative,” said Michele Thompson, country managing partner, EY Bahamas. “Across EY, we have a wealth of global expertise in FATCA and have managed some of the largest FATCA engagements in the world. As a firm, we’re leading the market, and we look forward to leveraging our experience to create a strong platform for implementation of these changes in The Bahamas.”
Convey’s Taxport system is a proven reporting platform that securely processes more than 1 billion 1099 reportable transactions on behalf of clients and certifies to the ISO 27001:2005 Information Security Management Standard to ensure that data security, availability, and confidentiality requirements are met.
As a Model 1 IGA, the government has entered into an agreement with the United States whereby the Competent Authority/Ministry of Finance will be responsible for collecting required data from impacted financial institutions and will be obliged to report that data to the U.S. IRS annually.
All Bahamas-based Financial Institutions (FIs) must comply with FATCA. The government has drafted legislation, and a formal consultation period will now ensue, with a final bill to be submitted to Parliament prior to April 4, 2015.
The Ministry of Finance and the project team have also engaged a representative Financial Institution Advisory Working Group to ensure that the views of the financial services industry are incorporated into the Bahamas FATCA solution.
Bahamas FIs have been receiving information since 2013 on FATCA requirements and preparing their data accordingly.
The government has also established communication forums and e-mail communications to enhance the flow of information between the Competent Authority and FIs.
The Ministry of Finance will be communicating timelines and additional details to FIs shortly. Additional communications from EY will also be forthcoming.
“In keeping with our long history of entrepreneurial activity and economic innovation, as well as our tradition of political and legislative stability, we are proud to be leading the way in FATCA compliance, in collaboration with EY and Convey,” added Hope Strachan, Minister of Financial Services.
