This past week, a bill to enact The Foreign Accounts Tax Compliance Act (FATCA) was passed in the Senate to ensure that The Bahamas continues to remain aligned with the most recent international financial standards.
In an earlier debate within the House of Assembly Minister of Financial Services Hope Strachan voiced her expectation that the bill would receive universal support within the House.
“The Bahamas is a well-established, well regulated, fully compliant jurisdiction. We are continuously evolving as our legislative agenda conforms to our regulatory obligations on an international and global scale. The Ministry of Financial Services is always working to ensure that The Bahamas remains at the forefront of the financial services sector. This bill represents an essential step in maintaining our high standards.”
Passed in the United States of America in 2010 as part of the Hiring Incentives to Restore Employment Act and ratified by the Bahamian government in 2014, FATCA is an internationally embraced U.S. federal law that aims to reduce tax evasion by U.S. persons and requires foreign financial institutions (“FFIs”) to report information on accounts of U.S. taxpayers to the U.S. Internal Revenue Service (“IRS”).
Minister Strachan admitted that while passing a law that originated in the U.S. and applies only to the U.S., tax payers may not be foremost on the minds of Bahamians, but FATCA is still “vital to the very existence of our financial services industry” within the context of widespread global acceptance and compliance (and penalties for non-compliance).
“This U.S. law, which has at its core, the penalty of a 30 percent 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.”
Under the agreement established between the Bahamian and U.S. governments, the Bahamian government would function as an intermediary between local financial institutions and the U.S. government for the sharing of information on an annual basis through the Bahamas Tax Information Exchange Portal. The deadline for final submissions on the portal is August 17, 2015.
Throughout her contribution, Minister Strachan emphasized the dedication of her ministry in ensuring that The Bahamas maintains the highest financial standards – fully compliant with international standards and leading the way in the Caribbean and West Indies:
“The FATCA process demonstrates one of the core philosophies of my ministry – that is to do all that is necessary to ensure full compliance by The Bahamas with established international norms and standards and thus ensure that we remain in a strong position, as the leaders in the region, always one step ahead of our competitors.”
With more major deadlines for the implementation of OECD global standards for the exchange and reporting of information looming in 2018 (aka Common Reporting Standards), Minister Strachan expressed confidence in her ministry’s ability to meet all of its obligations.
“Our goal is a stronger Ministry of Financial Services, a stronger financial services industry and a stronger Bahamas.”
