A top accountant believes that active negotiations will begin early next year for The Bahamas to be compliant under the Foreign Account Tax Compliance Act (FATCA) once the framework is in place by industry stakeholders. "My hope is that very early in the New Year we will put all of the work together to reach a consensus opinion on where we ought to go and then the government can start actively negotiating that position with respect to an Intergovernmental Agreement (IGA). When I talk to industry stakeholders, I definitely get a sense that they want to be a country that is covered with the IGA," according to Lawrence Lewis, a partner at Deloitte & Touche.

Lewis, who has responsibility for FATCA within The Bahamas, shared with Guardian Business that the country's financial institutions are in a better position to prepare, as the deadline to sign on has been pushed back until December 31, 2013. Based on discussions with industry partners, Lewis said many of the country's institutions were not on track to be completed by the original date of June 30, 2013. "The push back in the timeline is not only good for The Bahamas but for institutions in general because I don't think institutions were on track to be ready. Some of them would have gotten there but it would have taken quite a lot of effort to get there before June 30, 2013," he explained.

Lewis admitted to Guardian Business that most industry stakeholders so far have been playing the "wait and see" game as it relates to FATCA because of outstanding issues like the release of the finalized rules, the Model II of the Inter-Governmental Agreement (IGA) and whether or not the government will sign onto one of those IGA models. "My understanding is that we are waiting to see where things stood in respect to the issuance of the Model II agreement. That has come out and so from a jurisdiction standpoint, we have got to make a determination as to whether we want to go for an IGA and if so our preference is Model I or Model II within the IGA," he shared.

"Depending on which model of the IGA we go with, we may end up changing a few things in terms of what individual organizations will have to do to be compliant. That gives us more time to evaluate it, make a determination, drive the process forward and conclude the negotiations. People are waiting to see if the Bahamian government will sign onto one of the IGAs because perhaps that will give us a bit of a cover fire. In jurisdictions around the world, there has been a reluctance in institutions doing too much of anything until they really have a better sense of the lay of the land.

Those things are starting to fall into place. With the rules still being out, that has been a bit of an impediment." The second model of the IGA was reportedly released sometime last month. Lewis also believes that it's in the best interest of the government to sign onto one of the IGAs to provide industry professionals with more protection once FATCA comes on stream at the end of next year. "Depending on the model and the structure of the IGA, it may not in fact require financial institutions to register directly with the IRS so that they may be able to register with a local, competent tax authority," Lewis added. "Of course, there will have to be other activities and pieces of legislation to make that happen.

That could be an option under the Model II. One of the things that it would do is provide a better legal framework and basis for the disclosure of information to the IRS or some other tax authority." The accounting executive further revealed that the U.S. cannot be ignored if The Bahamas is going to be an international global trader in financial services because it remains the biggest, deepest and most capital liquid market. Lewis said it remains to be seen whether or not FATCA will have an impact on the competitiveness of the United States. FATCA seeks to identify U.S. taxpayers having accounts at foreign financial institutions (FFIs) and attempts to enforce the reporting of those accounts through withholding. It is also projected to raise $7.6 billion in tax revenue over a 10-year period.

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