The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

CABINET has approved “in principle” the Model 1 Foreign Account Tax Compliance Act (FATCA).

The Ministry of Financial Services confirmed that the Cabinet had approved, in principle, the Model I agreement between the Government of The Bahamas and the United States to implement FATCA following what was described as a productive round of negotiations with the US Treasury Department on April 8.

“The ministry has conveyed this approval in principle to the United States Treasury Department, who will now deem The Bahamas as having an agreement ‘in effect’, thereby allowing Bahamian financial institutions to register on the IRS FATCA Portal as Model 1 Participating Financial Institutions,” the ministry confirmed via a press release.

The ministry said that it would be issuing further guidance on the FATCA due diligence requirements and invites all affected Bahamian financial institutions to register with the IRS Portal to receive a Global Intermediary Identification Number (GIIN) by May 5, 2014. Under the terms of the IGA, all Bahamas-based financial institutions will have to supply the Government with the required information, with the latter then passing this on to the IRS/US Treasury. in an interview with Tribune Business earlier this month, Minister of Financial Services Ryan Pinder said that the ministry should be in a position, this month, to shortlist the bidders for its FATCA compliance system.

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. 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.