PRACTICE AREAS
© 2024 McKinney Bancroft & Hughes. All Rights Reserved
By Beatrice Miranda & Kevin Moree
The Hiring Incentives to Restore Employment Act of 2010 added chapter 4 of subtitle A, comprised of sections 1471 – 1474, to the Internal Revenue Code of the United States. Chapter 4 is known as the Foreign Account Tax Compliance Act (“FATCA”), which addresses non-compliance by U.S. taxpayers who are holding foreign financial accounts or assets. FATCA also requires certain foreign financial institutions (“FFIs”) to report to the IRS information about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold certain ownership interests.
In order to facilitate the provision of information on financial accounts held by U.S. taxpayers abroad, the U.S. Treasury Department collaborated with foreign governments to develop model intergovernmental agreements, which are intended to provide an effective and efficient means for complying with FATCA, while reducing the burden which FATCA compliance imposes on FFIs.
The Agreement between the Government of the Commonwealth of The Bahamas and the Government of the United States of America to Implement FATCA was entered into in November 2014, and The Bahamas and the United States of America Foreign Account Tax Compliance Agreement Act, 2015 (the “FATCA Act”) came into force the following year. Under that Act, FFIs report certain information on U.S. reportable accounts maintained by them to the Competent Authority in The Bahamas, which automatically provides such information to the Competent Authority in the United States.
The OECD’s Common Standard on Reporting and Due Diligence for Financial Account Information (“CRS”) was implemented in The Bahamas by the Automatic Exchange of Financial Account Information Act, 2016 (the “CRS Act”) and the Automatic Exchange of Financial Account Information Regulations, 2017 (the “CRS Regulations”). Both the CRS Act and the CRS Regulations were subsequently amended. Under the CRS, participating jurisdictions obtain specified financial account information from their financial institutions and automatically exchange such information with reportable jurisdictions on an annual basis.
While the FATCA Act only applies to the automatic provision of information by The Bahamas to the United States, under the CRS Act and the CRS Regulations The Bahamas automatically provide information to numerous jurisdictions around the world. Under both regimes the information is provided on a non-reciprocal basis, i.e. The Bahamas do not receive any information from the United States under FATCA or from any of the participating jurisdictions under the CRS.
McKinney, Bancroft & Hughes provides advice and assists its clients in complying with their due diligence and yearly reporting obligations under both FATCA and CRS.
Beatrice Miranda is a partner in the firm and a member of the following practice groups: Tax & Trade, Corporate & Commercial Transactions, Private Client, Financial Services & Regulations as well as Litigation and Dispute Resolution. Beatrice is qualified to practice law in Switzerland, England and The Bahamas.
Kevin Moree is a partner in the firm and a member of the following practice groups: Tax & trade, Financial Services & Regulations as well as Litigation and Dispute Resolution. Kevin is a Director of the Bahamas Financial Services Board and Co-Chair of the Bahamas Financial Services Board Tax Working Group.
