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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 ...
By NATARIO McKENZIE
Tribune Business Reporter
THE CANADIAN government has completed "all procedures necessary" to ratify the Tax Information Exchange Agreement (TIEA) it signed with the Bahamas last year, Sandra Slaats, a partner in Deloitte & Touche (Canada's) international tax group has told Tribune Business.
Mrs Slaats said: "The Canadian government has completed all procedures necessary to ratify the TIEA. The TIEA will come into force once the two governments notify each other that the TIEA has been ratified. Since we understand from the Bahamas Financial Services Board that the Bahamas has also ratified the TIEA, we expect this to occur ...
By NEIL HARTNELL
Tribune Business Editor
Bahamians "ought not to feel we have lost a national asset" through the Bahamas Telecommunications Company's (BTC) privatisation, a senior accountant said yesterday, pointing out that whatever happened the currently state-owned incumbent would have at least one major 100 per cent Bahamian-owned competitor in a liberalised market.
Raymond Winder, managing partner at Deloitte & Touche (Bahamas), told Tribune Business that what had been ignored in the BTC privatisation debate was that Cable Bahamas was now a 100 per cent Bahamian-owned company as a result of last year's Columbus Communications buy-out, and represented a "thriving & ...
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
The liquidator of a collapsed Bahamas-based broker/dealer has determined that 54 per cent of a $1.47 million shortfall, which is in excess of the $25 million loss that caused the company's failure, can be recovered, pledging that he wanted the winding-up to come to an end "as much as" the fiduciary clients.
Anthony Kikivarakis, the Deloitte & Touche (Bahamas) accountant and partner, in his fifth report to the Bahamian Supreme Court as the liquidator for Caledonia Corporate Management, said he would have to seek the court's directions on how the shortfall should be handled - whether it should be borne only by clients who had assets ...
The financial services industry is concerned about the impact that the implementation of the Foreign Account Tax Compliance Act (FATCA) will have on the country's trust and wealth management sectors. Lawrence Lewis, a partner at Deloitte & Touche, who has responsibility for FATCA in The Bahamas, said trust and wealth management are critical parts of the country's attractiveness as a financial services center.
"Trusts and similar structures form a very big portion of what we do, so there is great concern out there in the industry around the actual impact on trusts," he said yesterday. "Will trusts be foreign financial institutions (FFIs)?How will they need to be managed within the context of FATCA and who is going to get pulled into this?" FATCA's impact is an issue that Lewis is expected to address during a regional workshop on FATCA being hosted by the Ministry of Financial Services, the U.S. Embassy and the Bahamas Association of Compliance Officers (BACO) at the British Colonial Hilton today.
"One of the biggest challenges is that they (trusts) have got a little bit more of an interconnected web of participants in their structures so they've got people who are service providers who are going to get pulled into FATCA. They have third parties that they're doing business with. They will have their custodian and broker relationships and will have those on the administrative and accounting sides that are not employees of the fund themselves, and they can have different types of people and entities invested into them," he explained.
"How do they deal with this when it's not all in-house? When you look at the funds, they're responsible for it but not all of the moving pieces are under their direct control. These are some of the things that we see as challenges across the region."
The one-day workshop will be open to the private sector and an invitation has been extended to all CARIFORUM regional governments and other non-CARIFORUM regional governments including relevant regulatory and central government agencies. It will feature presentations by United States Treasury officials from the International Tax Counsel and the Internal Revenue Service (IRS)
He pointed out how there are some jurisdictions like the Cayman Islands and the British Virgin Islands (BVI) that have a stronger funds business than others, therefore the impact will vary across the region.
"Some jurisdictions are a little bit more into funds than others. Across the Caribbean we are probably somewhere in the middle. Of course the Cayman Islands is a funds leader and then you have got Bermuda and the British Virgin Islands (BVI) and us having some level of investment management infrastructure.
"The issues are likely to hit everybody but it's just that for us in The Bahamas, the funds part of our business is not as big as the private bank and wealth management piece of what we do. We will have some of those funds-related concerns but they are likely to be overshadowed by some of the concerns that we would have on our international financial services."
Last week, Financial Services Minister Ryan Pinder announced that the government is working aggressively to meet a June deadline that will determine The Bahamas' approach to the implementation of FATCA.
"We have a deadline of June 1 essentially where we have to make a decision on whether we will undertake an intergovernmental agreement (IGA) and then the one we will undertake. Then we have to finalize negotiations with the United States."
Pinder confirmed to Guardian Business that a recommendation is expected to be given to Cabinet by May.
FATCA was signed into U.S. law in 2010 though the Hiring Incentives to Restore Employment Act. FATCA seeks to identify U.S. taxpayers having accounts at foreign financial institutions and attempts to enforce the reporting of those accounts. It is projected to raise $7.6 billion in tax revenue over a 10-year period.
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's time for politicians to "be real", and for the public to come to grips with the truth about how the governments get the money to execute social and other programs, according to the nation's lead negotiator to the World Trade Organization (WTO).
"As a country, we still have a lot of education to do with our citizens regarding how government expenses and revenue works," Raymond Winder, who is also a partner with Deloitte & Touche, told Guardian Business.
"Somehow, Bahamians think the government can just create revenue and we can just continue to burden the government with this and that obligation and they will just continue to find [the money for them]."
Winder's comments follow a Moody's downgrade of the outlook for the Bahamian economy from stable to negative last week, although it affirmed the A3 rating for government bonds.
The international ratings explanation for the downgrade included a 150 percent increase in the debt level over the past decade to nearly half of GDP by the end of 2010.
Other reasons were historically low growth rates limiting the prospect of the country growing out of its debt burden and challenges the government faces to raising additional revenues.
Politicians have an important role to play as the country needs honest dialogue and discussion around these challenges, according to Winder, who said future opportunities for the government to borrow will be reduced.
"Going forward, The Bahamas will not be in a position to borrow to the extent that it has in the last five years," Winder said.
"We are not having sufficient balanced discourse on issues relevant to the country and while we may want government to do more, the reality is we are not in a position to continuously meet those new obligations."
Any expansion of existing government programs should be accompanied with an explanation to the citizenry of how such expansion would be funded. Winder said the government is "really challenged" to control its existing expenses - the bulk of which are payroll related.
Addressing the challenges to raising revenue, the WTO negotiator said the most important part of that discussion must focus on the issue of leakage - losses in the amount of revenue the government actually receives versus what it should receive. The current import-duty based tax system is one that should result in a minimum of such losses, Winder said, as it requires for the primary source to be paid up front.
He compared that to value added tax or income tax based systems that require voluntary reporting from persons or entities. Typically, they produce greater losses through leakage, he said.
"Until we can put in place sound controls around identifying leakages, just changing the system may not yield as significant an increase in revenue as people may expect," Winder said.
"If those controls are not in place it would be very similar to real property taxes, and we all know there are huge sums still outstanding on real property taxes."
By NEIL HARTNELL
THE financial services industry "needs a major game changer" such as allowing foreign attorneys to practice from this nation in non-Bahamian legal matters, a leading accountant telling Tribune Business this was critical to attracting the ultra high net worth individuals necessary to revive the economy.
Raymond Winder, managing partner at Deloitte & Touche (Bahamas), said such moves were necessary if the Bahamian economy was to grow at a rate high enough to absorb the 38,000 Bahamians who were either listed as unemployed, or 'not looking' for work, in the Department of Statistics' May 2011 Labour Force survey. Not to mention th ...
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.