The Bahamas should strive to become a "leading voice" calling for streamlined reporting under the Organisation for Economic Cooperation and Development (OECD) requirement for automatic exchange of information (AEI) on cross-border taxes, which is due to come into force in The Bahamas in 2018, a financial services professional yesterday urged.
Addressing the Nassau Conference yesterday, John Shoemaker, global head of product management for trusts and foundations at UBS Switzerland AG, said that a standardized form for AEI reporting would "tremendously" benefit The Bahamas' financial services sector.
Unlike the U.S.' Foreign Account Tax Compliance Act (FATCA), under which The Bahamas is due to begin reporting account information for U.S. account holders and taxpayers this month, there are no predetermined forms for AEI. This, Shoemaker believes, could cause unnecessary compliance complications for the local industry.
"FATCA got a lot of things wrong but one of the things it got right was the use of a standardized form. Very, very complex rules and we didn't have to reinvent the wheel to put a form out that let people know which boxes to tick.
"Unfortunately, we don't have that under the AEI so that's one of the things that I think the government can do as part of the public-private partnership that [Minister of Financial Services Hope Strachan] mentioned. Work with the industry here and let The Bahamas be a leading voice in trying to develop some standardized forms," he said.
With local attention largely focused on FATCA compliance, Shoemaker also stressed that simply memorizing tax laws would not adequately prepare local financial institutions for the AEI regime and further urged local professionals not to "give into the temptation" of information blocking given the increasing complexity of tax reporting under the AEI system.
"I think that will help both The Bahamas as a jurisdiction and the financial institutions within The Bahamas tremendously to have a standardized form moving forward," stated Shoemaker.
In June, leaders from the G7 renewed the push for "rapid implementation" of AEI by the end of 2017 or 2018. During an official visit in August, Director of the OECD Centre for Tax Policy and Administration Pascal Saint-Amans commended the Ministry of Financial Services' progress in implementing the AEI standard for financial reporting.
Although Saint-Amans did not divulge the details of the "challenges" left before the ministry, he stated that there is little to be done between now and the 2018 implementation deadline.
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