The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Developing a regime to comply with global automatic tax information exchange standards was yesterday branded “the immediate priority” for the Bahamian financial services industry, a senior executive adding: “We’re in a good place.”

Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business that the Bahamas needed to finalise “the criteria” that will determine which countries it enters into automatic exchange negotiations with come 2018.

Speaking after the industry’s annual conclave, Ms McCartney said the Bahamas’ efforts to comply with the US Foreign Account Tax Compliance Act (FATCA) had left it well-positioned to meet the global move to automatic tax information exchange.

“The immediate priority for the industry will be to collaborate with the Government on implementation of automatic information exchange and the Common Reporting Standard (CRS),” Ms McCartney told Tribune Business.

The CRS has been developed by the Organisation for Economic Co-Operation and Development (OECD) as the global standard for automatic tax information exchange, and Ms McCartney said the Government had confirmed its intention to create a joint private-public sector Task Force to determine the approach it should take.

Hope Strachan, minister of financial services, acknowledged that there was “much trepidation” about 2018, and the worldwide extension of FATCA-style automatic tax information exchange.

Addressing the industry conclave at the weekend, Mrs Strachan affirmed that an Implementation Task Force, featuring representatives from her ministry, the Ministry of Finance, the Attorney General’s Office, and the BFSB and wider financial services industry had been selected.

“This task force will determine how best to devise an implementation plan and to assist with the drafting of the requisite legislation before the end of this year,” Mrs Strachan said.

“Our work on this initiative is key to the survivability of the sector, and I commit to working assiduously to ensure its success.”

Ms McCartney told Tribune Business yesterday that the financial services industry “within a week or two” would present its recommendations to the Government on an implementation strategy.

This is designed to “form the basis” for the work that the Task Force will perform.

“I think the fact that we successfully implemented FATCA serves as a foundation for the work around the CRS,” the BFSB chief executive added.

“CRS is ‘global FATCA’, and the fact we’ve adopted a bilateral approach makes it easier for us to build on the framework we have with reporting to the US.

“We have a foundation. We’re in a good place. The question is to decide the criteria for determining which countries we will enter into negotiations with for bilateral agreements.”

The Bahamas has agreed to automatically exchange tax information on a bilateral - as opposed to multilateral, basis - which allows it to determine the countries it will reach agreements with.

This was previously a key concern for the financial services industry, with Mrs Strachan’s predecessor describing it as “difficult if not impossible” for the Bahamas to implement the CRS standard on a multilateral basis.

Ryan Pinder told the 2014 Nassau Conference that if there were 80 signatories to the CRS, the Bahamas and its financial services industry would need to instantly know structures designed to avoid tax in each of them and provide the relevant information instantly.

“Tell me: Is that possible?” asked Mr Pinder then. “That’s an impossible request on a multi country basis, certainly for a country like the Bahamas.”

Describing the multilateral approach as “fundamentally flawed”, Mr Pinder said the OECD itself had conceded tax information exchange should not take place unless countries had legal and administrative frameworks in place to ensure the details provided were kept confidential and used properly.

Forcing the Bahamas to enter into automatic information exchange with multiple countries, he warned, could expose it - and the financial services industry’s clients - to nations where details would be used improperly or shared with the wrong people, jeopardising their safety and security.

Mrs Strachan acknowledged the importance of the Bahamas being able to resist the multilateral approach at the weekend, saying: “The bilateral path that we have chosen toward implementation is courageous and ambitious, and will require much work and focused attention.”

Ms McCartney, meanwhile, told Tribune Business that improving the Bahamas’ ranking in the World Bank’s annual ‘ease of doing business’ assessment was next on the financial services industry’s priority list.

“Number two for us is the ease of doing business,” the BFSB chief executive said, “improving efficiency and turnaround time for applications, be it for company incorporations or permanent residency.

“Everyone acknowledges that 106th as a country [on the World Bank list] is not where we want to remain.

“We want to improve our ranking. While we have made improvements, the pace at which other jurisdictions have improved has been greater than ours.”

Ms McCartney said the International Business and Finance Summit (IBFS) was treated to a presentation by Dr Nicola Virgill-Rolle, who is overseeing the National Development Plan (NDP).

Encouraged by the Plan’s likely focus on the ‘ease of doing business’, Ms McCartney said improvements in this area were essential if the Bahamian financial services industry was to capitalise on potential growth opportunities.

“Critical for us is to get the enablers in place, and that is improving the ease of doing business and the efficiency of doing business,” she added. “That certainly will be the focus moving forward.”