The Bahamas is taking the last formal steps necessary to comply with the U.S. Foreign Account Tax Compliance Act before the law’s reporting deadline of Sept. 30.
The U.S. law requires foreign financial institutions to report certain information on accounts belonging to U.S. citizens. The information financial institutions are required to turn over includes identities, Tax Identification Numbers and addresses. Account balances are included as well, if they are over $50,000 for individual U.S. citizens and $250,000 for entities with a majority controlling ownership by a U.S. citizen.
“The Bahamas is committed to all international financial reporting obligations.”
The Bahamas government passed a bill Aug. 3 that vowed its compliance with the U.S. law, and it officially set a deadline of Aug. 17 for its financial institutions to submit the information to the government’s electronic portal so that it can be submitted to the U.S., Bahama Islands Info reported.
Minister of Financial Services, Hope Strachan, said the Bahamas was committed to not only the U.S. law, but all international financial reporting obligations, the source reported.
“The FATCA process demonstrates one of the core philosophies of my Ministry – that is to do all that is necessary to ensure full compliance by The Bahamas with established international norms and standards and thus ensure that we remain in a strong position, as the leaders in the region, always one step ahead of our competitors,” Strachan said, according to the source.
Keeping institutions informed
The Bahamas preparation for FATCA reporting began long before passing its bill earlier this month.
In 2013, as the Bahamas and U.S. negotiated an intergovernmental agreement, Bahamas financial institutions had been instructed to gather data in preparation, the Bahamas Weekly reported.The Bahamas communicated with financial institutions often so they were informed of the latest developments.
“The government took steps to keep financial institutions continually informed.”
The Bahamas and U.S. then signed a Model I intergovernmental agreement Nov. 3, 2014. With this particular agreement, financial institutions gather information on U.S. account holders and give it to the Bahamas Ministry of Financial Services in an electronic format. The finance ministry would then gather the electronic data from all its financial institutions and turn it over to the U.S. in one electronic file.
After working with American financial consultants, the Bahamas released guidance notes earlier this year, which helped financial institutions interpret what they were obligated to report.
The government took steps to keep its financial institutions continually informed in the months leading up to the deadline so that there weren’t surprises. It maintained a FATCA web site to continue relaying information to financial institutions, the Bahamas Tribune reported. Through the web site, institutions were informed of upcoming deadlines long before they were passed into law. Before the Aug. 17 reporting deadline, institutions first had to register for the government’s portal by July 31.
“It’s fair to say that the process has proceeded fairly satisfactorily in terms of us being able to meet the timelines for FACTA implementation,” Finance Minister Strachan said to the Bahamas Tribune. “For all intents and purposes it would seem that we are on target. We are foreshadowing that we will be ready come September 30.”