The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamas has secured “sponsored exemptions” from the US Foreign Account Tax Compliance Act (FATCA) for Foundations, Financial Services Minister Ryan Pinder recently revealed, telling Tribune Business that six vendors had made the preliminary short list to build a FATCA reporting system.

In an interview with Tribune Business yesterday, Mr Pinder acknowledged that the Bahamas under FATCA now has sponsored exemptions for Trusts, Funds and Foundations.

“We have been regional leaders with respect to FATCA and being able to negotiate key provisions as a country that countries throughout the world have been unable to do. We were successful in our recent trip to Washington in negotiating the final part to the FATCA agreement and coming to agreement on that. We were able to put in a sponsored exemption for Foundations, so we have Trusts, Funds and Foundations that the Bahamas was responsible for negotiating,” said Mr Pinder.

Mr Pinder noted that inter-governmental agreement (IGA) spoke only to FATCA, adding that the IGA as previously structured went beyond that scope. “The agreement as it was drafted prior covered a lot of information exchange and a lot of policy on how we endorsed information chance. Our thought was that this was a FATCA only agreement and we were able to negotiate our IGA as a FATCA implementation agreement that removed references to the OECD global exchange and the like. We thought that was a very significant accomplishment in our negotiations as well.

“We have reached a consensus with the US government on the language. We have reached consensus on the items that we wanted to negotiate for our industry and put the Bahamas in the best position it can. Now we have an agreement, Cabinet has approved the language, the IRS has approved the language and we are considered having it in effect. What that means is that the US still has some procedures to go through, they have to get their State Department and get final sign off but they will regard the agreement as being in effect as of last week. Our industry can feel comfortable that we negotiated the best position possible for them,” said Mr Pinder.

Mr Pinder also revealed that six vendors had made the government’s preliminary short list to build the FATCA reporting system. “We have done short list of vendors. We have contacted those vendors. We are looking to bring them in over the course of the next two to three weeks to be able to discuss their responses to the RFP and discuss where we think each one of them has to expand on or develop more. We are on track to have that in place along the timelines previously announced,” said Mr Pinder.

The Ministry of Financial Services confirmed last week 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 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.