The Tribune

By NATARIO McKENZIE

Tribune Business 
Reporter

nmckenzie@tribunemedia.net

A Bahamian accountant yesterday said the other nations would ultimately push for arrangements similar to the US Foreign Account Tax Compliance Act (FATCA), warning that this will eventually result in tax information being more freely shared.

Lawrence Lewis, a partner at Deloitte & Touche (Bahamas), and its lead partner on the FATCA initiative for the Bahamas and Turks and Caicos Islands, told Tribune Business: “I think it’s a valid concern. I don’t know that it’s an immediate concern. I don’t think that other jurisdictions in another year or two will come forward with their own agreements, but I see this as part of a continuum on which we are moving, which will eventually take us to a point where tax information is much more freely shared.

“I think other jurisdictions and their governments are in the same kind of fiscal debate that brought the US to this FATCA initiative. I think this is just part of that process in just continuing to move toward that.”

FATCA, which was brought into law in March 2010, is a set of rules set out by the US Internal Revenue Service (IRS) designed specifically to limit tax evasion by US persons living abroad.

Compliance with FATCA will include entering into a Foreign Financial Institution (FFI) agreement with the IRS, if an institution concludes that it needs to become a participating FFI.

Under FATCA, US taxpayers holding financial assets outside the US must report those assets to the IRS or face penalties. FATCA will also require foreign financial institutions to report directly to the IRS certain information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.

Mr Lewis said the Bahamas can no longer boast of being a tax haven, a reputation he said this jurisdiction should move away from.

“I think the view of the Bahamas as a tax haven and using that as a competitive advantage, those days are fast fleeing us,” he explained.

“Our competitive advantage is going to have to come from the quality of the labour force that we have, the service providers, the innovativeness of our financial services sector, the kinds of products people are able to use. The maturity of the Bahamas as a jurisdiction and our proximity to the US must come more to the fore in terms of why the Bahamas should be chosen as a jurisdiction.”

Mr Lewis added: “The more that we try and hold on to ‘tax haven’ the more it becomes a kind of sinking ship that’s going to drag us down.

“We’re in a world where being a tax haven is not something that’s sees as being attractive. We will just continue to have the larger countries putting pressure on us to the extent where they continue to perceive us as a tax haven.”