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The Bahamas' compliance under the Foreign Account Tax Compliance Act (FATCA) is "progressing," according to a stakeholder.
Lawrence Lewis, a partner at Deloitte & Touche who is leading his firm's work on FATCA, said that while the government is moving forward to implement the Model I Intergovernmental Agreement (IGA) and could be officially signing on in early 2014, the Bahamas still needs to introduce legislation that would protect financial institutions and clients under FATCA.
"There's going to be legislation that's attached to it because it will need to be something that will then give the financial institutions the right and the obligation to pass customer confidential information to our competent tax authority, then interact with the IRS so there will have to be legislation as to not expose financial institutions that will be going through that process," he told Guardian Business.
"I have not been privy to any legislation, but I do understand that certainly wheels have been turning in that regard.
"It's likely to happen not too late in the new year. Obviously, from an organizational standpoint, even though it has been announced the way that we're going, there is a certain level of comfort that comes with the certainty of actually having signed on and having the agreements in hand, and everybody being able to see it and what's required under it."
FATCA was signed into U.S. law in 2010 through Hiring Incentives to Restore Employment Act. It seeks to identify U.S. taxpayers with accounts at foreign financial institutions and attempts to enforce the reporting of those accounts.
The IRS released Notice 2013-43 pushed back the Foreign Financial Institution (FFI) Registration Portal opening and extended most of the FATCA deadlines established by the final regulations.
The Foreign Financial Institutions (FFI) Registration Portal opened on August 19, 2013, a little over a month later than previously planned.
At that time, FFIs got the chance to start setting up their profiles and adding entities without actually committing to signing or registering, until January 1, 2014.
The IRS also extended other compliance deadlines including withholding, onboarding and pre-existing account remediation by six months.
With the debate intensifying on the introduction of value-added tax (VAT), Raymond Winder, managing partner at Deloitte and Touche, doesn't believe that form of taxation is "appropriate" for web shops.
"You have to remember that VAT ultimately goes to the consumer, so if you tax the web shops VAT, what they would do is pass it on to the players. That's not what you want," he said yesterday.
"You're really saying that you have enterprises that are generating huge profits and they should be making more of a contribution to government. That's what you're saying and that will not happen through VAT. Clearly, it's unfortunate for us to have enterprises the size of web shops in The Bahamas and they are not feeling some sort of taxation. But I'm not sure if value-added tax is the appropriate taxation for the web shops."
As a solution, he suggested that web shops be made to pay higher business licenses taxes.
Winder's comments are a far cry from those of Philip Galanis, managing partner at HLB Galanis & Co., who recently told Guardian Business it's an area that VAT should be added to because the country's
gaming sector is currently "revenue central".
"I think the issue is really going to be whether or not the winners are going to be taxed at the VAT level because I don't think they are," Galanis said.
According to the Valued Added Tax Bill 2013 and the Value Added Tax Regulations 2013, while most goods and services, including cable, phone and electricity bills for most consumers, will be "vatable", some services and goods will be exempted from the new tax such as games of chance, gambling and lotteries.
But Galanis said it's something the government should reconsider.
His comments were backed up by a International Monetary Fund report on tax reform in The Bahamas, titled "Tax Reforms for Revenue Buoyancy", which suggests that spending on gambling activities should be subject to value-added tax in the same manner as other forms of consumption expenditures.
Robert Myers, co-chair of the Bahamas Chamber of Commerce and Employers Confederation's Coalition for Responsible Taxation, has suggested that in the interest of bolstering government revenues and fairness web shops must be subject to taxation of some kind.
Tyrone Knowles was on fire as he demolished the pins for an outstanding 218 high game and also the three-game high set of 639. In doing so, Knowles led the Fidelity Bulldogs to a 2-1 win over BAF Financial. Stan Bethell was also on top of his game as he toppled the pins for the second high game of 213 and also second high set of 594 to lead the Coca-Cola Strike Force past the Sunshine Insurance team, 3-0. Bethell was assisted by Monique Miller who led the ladies with a 199 game and 543 set. Patrice Archer came in second for the ladies with a 187 game and a 475 three-game set.
Budweiser Strikers 3, Deloitte & Touche 0
Leno Corporate Services 3,
Forsythe Communications 0
The Tax Information Exchange Agreement (TIEA) between The Bahamas and Canada, which could result in greater foreign direct investment and employment opportunities, came into force Wednesday.
Canada's Department of Finance made the announcement yesterday, posting a notice on its website indicating that the agreement was signed. With the TIEA in effect, it means that Canadian corporations will be able to set up active business in The Bahamas and, once they meet the stringent qualifying standards and tests, take advantage of the special tax incentive.
According to Deloitte Bahamas managing partner, Raymond Winder, this TIEA creates a competitive advantage for the Bahamas compared to Barbados.
"The biggest thing about this is the fact that for years Barbados has had competitive advantage over The Bahamas because it had a tax treaty with Canada which allowed Canadian companies to be domiciled in Barbados and repatriate profits to Canada and pay a small corporate tax in Barbados," Winder said.
"The TIEA allows The Bahamas the same privileges that the Barbados tax treaty allows, the only difference is the Canadian subsidiary doesn't need to incur any tax at all in The Bahamas to get this treatment. So the TIEA actually puts The Bahamas and other countries that sign TIEAs [with Canada] at a competitive advantage as compared to the current tax treaty Canada has with Barbados."
Getting into some of the legal aspects of the agreement, Higgs & Johnson partner, Dr Earl Cash, honed in on Article 13 of the TIEA. That article spells out the terms of the agreement's entry into force. It indicates that activities that either government is seeking information about must relate to matters considered a criminal offense in its own jurisdiction.
Cash also pointed out that the agreement reaches back to cover a taxable period from January 1, 2004. He said this may have been done to not prejudice Canada's information exchange provisions with The Bahamas against those of the United States, which has tax information exchange provisions with going back to that time.
Initially singed-off since June 17th, Canadian legislators had to enact changes to its excise laws to bring the TIEA into force. "The Excise Act and Excise Tax Act" amendments received royal assent in Canada on June 26th, paving the way for the TIEA coming into force.
At the time, Canadian-based experts Guardian Business spoke to thought early fall was a likely timeframe for the agreement coming into effect.
By NEIL HARTNELL
Tribune Business Editor
The Government has little choice but to continue privatising key revenue-generating agencies such as the Registrar General's Department, a leading accountant warning yesterday that the public sector was failing to attract "the talent that is needed to take the country into the next century".
Raymond Winder, managing partner of Deloitte & Touche (Bahamas), told Tribune Business that despite the Government's commitment to reducing public sector response times and improve efficiencies, it not appear to "be making the headway we need to make to be more competitive".
Suggesting that this reduced the Bahamas' attractiveness ...
Continuing its charge to foster the growth and development of the financial services sector of The Bahamas, the Ministry of Financial Services, led by the Hon. L. Ryan Pinder, M.P...
By NEIL HARTNELL
Tribune Business Editor
Enhanced reporting requirements could give the Bahamian financial services industry the opportunity "to go after US clients" once again, a leading accountant said yesterday, pointing out that marginal, per client compliance costs would be "substantially reduced" by upfront systems investment.
Lawrence Lewis, the Deloitte & Touche (Bahamas) partner, speaking to Tribune Business after addressing a Bahamas Financial Services Board (BFSB) seminar on the issue, said the US Foreign Account Tax Compliance Act (FATCA) provisions would create a regulatory 'level playing field' since all jurisdictions would be required to adhere to i ...
It turned out that 13 was a lucky number for 25 seasoned and budding golfers, as they walked away with awards at last Sunday's Bahamas Hotel Association's (BHA) 13th Annual Golf Tournament at the Ocean Club Course on Paradise Island.
Despite the threat of inclement weather, a record number of 104 golfers registered to claim bragging rights while helping to raise over $20,000 for student scholarships and a range of programs which BHA is doing in the nation's schools.
"We are most appreciative of the tremendous support from our members, friends of BHA, and of course the golfers for supporting this year's tournament," stated BHA President Stuart Bowe. "The turnout was fantastic. It will go a long way next year toward matching and we hope exceeding the record 12 students who were awarded scholarships this year as a result of previous efforts. The tournament and our auctions have helped to put 81 young Bahamians through college during the past year with scholarships valued at $287,000, "added Bowe.
Tournament organizers Fred Lunn, John Spinks, Ted Adderley, Nelson O'Kelley and Billy Lee commended the golfers for their support, in announcing the winners of this year's tournament at an awards ceremony following the tournament. The tournament was sanctioned by the Bahamas Golf Federation (BGF).
Capturing first place was the team of Peter Muscroft and Doug Cowper which was sponsored by Royal Star Assurance. They were followed by Cliff Petford and Jake Neudorf. Third place honors went to the Royal Bank of Canada team of Phil Andrews and G. Hill. Fred Lunn and Errol Brown took fourth place and were sponsored by the Nassau Paradise Island Promotion Board.
Rounding out the top 10 teams, in fifth place was Roger Chow-How and Eddie Carter. Sixth place went to Andrew Burrows and John Kinger. Taking seventh was Jeffrey Walcott and Tyrone Cunningham representing BTC. Nicholas Knowles and Harrison Collins took eighth. Ninth place went to Jim Wilson and Patrick Knowles representing Scotiabank, and capturing 10th was the team of Nelson O'Kelly and Paul Burke from Kerzner International.
This year's sponsors included: Fidelity Bank, Kerzner International, Royal Bank of Canada, the Nassau Paradise Island Promotion Board, Bahamas Food Services, The d'Albenas Agency Ltd., Scotiabank, Bank of The Bahamas, the Bahamas Telecommunications Company, RoyalStar Assurance, KPMG, Graham Thompson & Co., Restaurants Bahamas (KFC), J.S. Johnson, the Lyford Cay Club, Banca del Sempione, Bahamas Wholesale Agency Ltd., Commonwealth Bank, Caribbean Bottling Company, Bahamas Hot Mix, N.U.A Insurance & Brokers, Deloitte & Touche, Nassau Motor Company, Pigeon Cay Beach Club, Providence Advisors, Wong's Rubber Stamp & Printing, American Hotel Register, Viva Wyndham Fortuna Beach, Sheraton Nassau Beach Resort, Pelican Bay at Lucaya, American Airlines, Bahamasair, Comfort Suites Paradise Island, Treasure Cay Resort, Green Turtle Cay Club, Sandals Royal Bahamian, Ocean Club Golf Course, Nassau Airport Development Company, Island Merchants, Ridge Farms, Pineville Motel, Sunrise Resort & Marina, Blue Lagoon and Dolphin Encounters, Senor Frogs, Diamond's International, Via Caffe, Toads Hall Square Hill Estates, Sands Beer, Jewels by the Sea, Security & General Insurance, Luciano's of Chicago and Old Bahama Bay Resort & Yacht Club.*Look for article images in our Online Gallery section.
Local manufacturers cannot continue to rely heavily on import taxes, if The Bahamas is to gain accession to the World Trade Organization (WTO), a top accountant has stated.
Raymond Winder, managing partner at Deloitte and Touche and chief negotiator for The Bahamas' WTO accession, stressed to Guardian Business the need for the country to strike a balance as the current tariff rates remain too high in certain areas.
"The question is can we carve out a portion of the products which we currently manufacture in The Bahamas and be able to retain high enough rates on those products," he said.
"However, we will have to reduce the tariffs on other areas so the overall tariff rate is low even though you may have portions of those products that have high taxes, but others will now have to be much lower and bring the average down.
"Clearly, a number of our local manufacturers rely heavily on import taxes on finished products that are similar to the ones that they manufacture and they rely on that."
Chairman of the Bahamas Trade Commission Philip Galanis recently expressed concern about the impact the liberalization of trade will have on the manufacturing and agriculture industries, where stakeholders believe it will leave them "extremely vulnerable" to the importation of goods that compete with those they produce. He also admitted that it might be quite some time before The Bahamas receives WTO accession.
"It really creates a dichotomous situation. While we understand the needs and concerns of the producers, the government also has to take into account the needs of citizens who want products at a cheaper price," he said.
"Egg producers are very concerned because there is an excess of eggs in the Bahamian market presently. Part of the reason is because the food stores are saying that they can buy eggs cheaper. So they (egg producers) feel threatened or vulnerable to what's happening. They are hoping that the government will help them in a way, either by increasing tariffs on imports, or limiting the importation."
Their comments to Guardian Business come as Minister of Financial Services Ryan Pinder confirmed that The Bahamas and WTO have "mutually agreed" to postpone a working group meeting. With The Bahamas still in the process of completing its factual summary on its trade regime, and with the WTO Bali Ministerial Conference underway, the two sides agreed to postpone that meeting until February.
To date, the WTO has received this nation's offers as it relates to goods and services, indicating to what extent The Bahamas is willing to liberalize its trading regime in those areas.
Among the primary requirements of accession are a reduction in the average import tariff level, a fact that feeds into the discussion on the need for alternative forms of revenue such as value-added tax (VAT), upon WTO accession.
The Ministry of Transport has received complaints that certain bus drivers play pornographic videos during the transport of passengers, Minister of State for Transport and Aviation Hope Strachan revealed yesterday.
The complaint comes as the Ministry of Transport is dusting off longstanding plans for the creation of a unified bus system, Strachan said as she headed into the weekly Cabinet meeting.
Officials from the Ministry of Transport held a meeting last week with jitney drivers and public franchise owners seeking support for the initiative and to address public concerns.
"We wanted to address the number of complaints that we get about the jitney drivers and how they operate their vehicles on the streets of New Providence, and we also wanted to hear from them about any issues they have with the Road Traffic Department and the ministry," Strachan told reporters yesterday.
In addition to the complaints related to the playing of pornography, public complaints regarding the public busing system also include the loud music played on some buses, drivers abandoning their routes and the inappropriate attire of certain drivers.
Strachan said that during last week's meeting the proposal for the unification of the public bus system was supported.
"For the most part they are actually going to support that initiative, so we hope to get that going in the next fiscal year."
The unified bus system was pushed by the former Christie administration, however, plans for that program subsided after the Progressive Liberal Party (PLP) lost the general election in 2007.
There are about 500 franchise holders in the public busing system. The government is looking to bring all of those owners under one umbrella.
"It is a huge undertaking and I'm sure the cost involved is going to be enormous. We haven't really valued it," Strachan predicted.
She added that accounting firm Deloitte is engaged in an exercise to determine the value of each franchise.
"We have to know the value for the franchise owners so they know what is due to them, and the government knows what its financial obligations are going to be."