The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The threat from other FATCA-style tax information sharing mechanisms is “not as imminent as people think”, the Minister of Financial Services said yesterday.

While other G-20 and OECD members, particularly the European nations, are expected to follow the US lead and seek to impose their own automatic information exchange systems on the Bahamas and other international financial centres, Ryan Pinder said they would likely wait to assess the Foreign Account Tax Compliance Act’s (FATCA) success.

“I don’t think it’s as imminent as people suggest,” Mr Pinder said of other FATCA-style arrangements.

“FATCA is not fully implemented until 2017. That’s four years from now. Other jurisdictions are looking at FATCA as a predicate to see if it can be successfully implemented.

“I don’t see it as imminent action, other than words. I think we’ll have continued rhetoric.”

While the UK prime minister, David Cameron, had made his position and demands clear with regard to is country’s overseas territories, such as the Cayman Islands and Bermuda, no such pressures could be applied to the Bahamas.

“We’re a sovereign nation, and act in our interests as a sovereign nation,” he added. “That’s a key competitive advantage, no doubt about it.”

Speaking after a private meeting with around 100 senior financial services executives, one of the last steps in the FATCA consultation process, Mr Pinder said the final paper on the position the Bahamas should adopt will be presented to Cabinet within the next fortnight.

Declining to state which of the two Model Intergovernmental Agreements (IGAs) it would recommend the Bahamas take for FATCA compliance, Mr Pinder said he felt the Bahamas had done all it could to mitigate the associated cost and administrative burdens.

“I think we have done the best we can possibly do,” he told Tribune Business. “We can’t eliminate it. It’s a new form of information exchange the private sector and the Government have to embrace.

“We have been able to address it as far as we could, and been able to offer the highest level of comfort [to industry] that we can.”

Addressing yesterday’s meeting with top financial services executives, Mr Pinder added: “I was able to lay out from A-Z what the Government has undertaken, and get input from the private sector before we present to Cabinet a position paper to ultimately decide whether we go with IGA Model 1 or 2.

“It was a very cordial meeting, and I think the industry is unified in supporting the approach the Government has taken.

“I think the industry was very satisfied with that, and we should be in a position in a week or two to submit that paper to Cabinet. That is the final stage of the consultation process.”

As to which compliance route the Bahamas will take, the Minister said: “That’s ultimately up to Cabinet. There are pros and cons to both models.

“Certain elements of the industry prefer Model 1 due to the protection it offers by providing information through the Government, but some prefer Model 2.

“You’re always going to have participants within the industry that are going to have different views, but by and large we have the support of the industry. It was a completely open and transparent process.”

Mr Pinder previously disclosed that the Government had secured ‘sponsored exemptions’ from FATCA for the Bahamas’ trust, private trust company and feeder fund products.

This will mean these products do not have to register individually with the Internal Revenue Service (IRS) under FATCA, thus reducing the compliance cost and paperwork burden.

Mr Pinder said the ‘sponsored exemptions’ brought “standing applause” at yesterday’s industry meeting, and he added: “They certainly appreciate the impact it has on our industry.

“They are supportive and enthusiastic that we were able to negotiate positions favourable to industry.”