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By NEIL HARTNELL
Tribune Business Editor
Bahamian economic recovery will not happen until 2012 unless foreign direct investment (FDI) rapidly rebounds to levels seen two to three years ago, a senior accountant told Tribune Business yesterday, as fears intensified that a rebound - and reduced unemployment - may not occur next year.
Describing foreign direct investment as "the only thing that could create a real stimulus today" for the Bahamian economy, Raymond Winder, managing partner at Deloitte & Touche (Bahamas), said: "When you look at the performance of the US economy, and the performance of our economy, if those numbers do not begin to turn around - spending, income, mor ...
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.
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
THE Bahamas' proximity to the US is the key factor undermining Bahamian entrepreneurs and small businesses, a leading accountant believes, adding that "thousands of jobs and hundreds of companies" would be created at home if it were not for the ease of Miami shopping.
Raymond Winder, managing partner at Deloitte & Touche (Bahamas), told Tribune Business that because a significant percentage of residents did the bulk of their goods and services purchases in Florida, the "normal recycling" of investment and salary dollars did not happen where the Bahamian economy was concerned.
It was this loss of potential consumer spending th ...
A top accountant is questioning why small businesses with less than $50,000 in gross sales should be exempt from proper record keeping, arguing it stunts the growth of business and promotes bad practices.
Raymond Winder, the managing partner at Deloitte & Touche (Bahamas), said the exemption is being seen with a measure of "concern".
For starters, he told Guardian Business that the exemption itself makes it difficult for the government to even know if a firm did not exceed the $50,000 mark.
"In my view, any organization that is licensed by the government should keep some books on record. By doing that, it serves as a basis to understand what they are doing to further improve their business," he argued.
"And if you're not tracking your business, how do you move from a small business to a big one?"
The question is timely, as the government pushes forward on a revised Business License Act that enforces better record keeping.
According to Ryan Pinder, the minister of financial services, the purpose of the new legislation is to come more in line with the Organization of Economic Cooperation and Development (OECD) to ensure compliance.
Pinder, who is also the minister for manufacturing and trade, said he actually agrees with Winder.
"I think he is right. However, the culture we are at, especially with small companies in the economy that are cash based, the culture is they don't keep proper records," he explained. "We didn't want it to be a barrier to certain businesses so in the companies act, we modeled it after the Business License Act threshold. But that is not to say we don't encourage best practices."
The minister said the legislation is really not intended for these small businesses.
"The ambition is always for them to grow to medium or big businesses," he added. "If you are seeking capital you'll need to present these types of records."
In The Bahamas, businesses with under $50,000 in turnover are only required to pay a nominal fee for their license. For his part, Winder told Guardian Business that the lack of standards for smaller businesses only prevents growth and fails to encourage them to take positive steps.
There are also other instances where record keeping becomes useful, such as the recent Road Works Relief Plan debacle.
Following the disastrous project in New Providence, whereby hundreds of businesses lost money or shut down entirely, entrepreneurs have been unable to prove their losses.
"Records are always important," he said. "One of the fundamental infrastructures to be in place as we move towards taxation is record keeping. Poor record keeping leads to poor decisions on how to tax and who not to tax. Poor record keeping also leads to the inability to truly make people accountable."
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
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 ...
By NEIL HARTNELL
Tribune Business Editor
The Government has been urged to "pursue" all taxes due to it under the existing system rather implement new ones to combat its fiscal woes, a leading accountant calling on it to "go full force" in plugging all loopholes.
Raymond Winder, managing partner at Deloitte & Touche (Bahamas) and the Bahamas' leading negotiator over its accession to full World Trade Organisation (WTO) membership, told Tribune Business that the private sector's general weakness meant it could not absorb new or increased taxes at this time.
Noting that the 'increase revenue' message coming from the likes of the International Monetary Fund (IMF) a ...
By NEIL HARTNELL
Tribune Business Editor
The Bahamas is expected to start bilateral discussions on its bid to accede to full World Trade Organisation (WTO) membership early in the New Year, with the US first up, as it bids to have its initial goods (market access) offer ready for June 2011's working party meeting.
Raymond Winder, the Deloitte & Touche (Bahamas) managing partner and this nation's lead WTO negotiator, outlining the upcoming talks timetable, yesterday urged the Bahamian private sector to supply himself and the Government with as much data on their needs and companies as possible, telling Tribune Business his success "hinges" on their responsiveness.
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.