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Today’s Top Headlines

Bahamas to Pursue FATCA Model 1 IGA

by Mike Godfrey,, New York

26 July 2013

The Bahamas Ministry of Financial Services has announced that the Cabinet approved its proposal to go with a Model 1 Intergovernmental Agreement for Foreign Account Tax Compliance Act (FATCA) implementation. Negotiations in this respect are expected to begin immediately.

The provisions under the US Hiring Incentives to Restore Employment (HIRE) Act commonly known as FATCA became law in March 2010. FATCA targets tax non-compliance by US taxpayers with foreign accounts; effectively, it requires Foreign Financial Institutions (FFIs) to obtain and report information regarding US customers and beneficial owners to the Internal Revenue Service) (IRS) or suffer 30 percent withholding tax on US sourced income.

In 2012 the US Treasury Department announced that it was engaged with countries and jurisdictions around the world to improve international tax compliance and implement the information reporting and withholding tax provisions under FATCA. It introduced model intergovernmental agreements (IGA) that serve as the basis for concluding bilateral agreements with interested jurisdictions. These provide the option for government-to-government reporting versus financial institutions reporting directly to the Internal Revenue Service, with reporting in the latter case supplemented by information exchanged between the governments concerned, upon request.

TAGS: compliance | Institutions | Foreign Account Tax Compliance Act (FATCA) | tax | tax compliance | Bahamas | interest | FATCA | law | agreements | withholding tax | Compliance | Employment | Tax

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