Thursday, December 8, 2016
Wednesday, February 1, 2017
Here follows the contribution by the Member of Parliament for the Seabreeze constituency and Minister of Financial Services Hope Strachan on the Automatic Exchange of Financial Account Information Bill, 2016:
Mr. speaker, I rise to second the following bill:
A bill for an act to provide for the implementation of the common standard on reporting and due diligence for financial account information in tax matters and for connected purposes a second to the reading of a bill by the member of parliament for the Seabreeze constituency and Minister of Financial Services
I rise on behalf of the fine folks of the Seabreeze Constituency today to second the Bill before us today. I wish my constituents to know that I am forever grateful to them for the confidence they reposed in me to come to this august place to do business on their behalf.
Today is also an important day for me as The Minister of Financial Services. This Bill that we will be debating here today is the most critical piece of legislation for the Financial Services industry right now.
Mr. Speaker, that is why today you will see in the gallery of this house several professionals including Miss Tanya McCartney CEO of The Bahamas Financial Services Board along with several industry professionals. These individuals are heavily invested in this second pillar of our economy and have a passion to ensure it’s sustainability and viability. They worked tirelessly and contributed extremely valuable time to producing this Bill before us today. I wish to thank them publicly today for their efforts in this regard as well as for the consistent support that they have rendered to The Ministry of Financial Services in the last several years and more particularly I wish to thank them for their support during my tenure in office since January 2015.
I believe that it is fair to say that this bill is key to the very survival of the Financial Services industry. It is of course not the most riveting topic to many of our people who are still recovering from the devastating effects of Hurricane Matthew and Joaquin. Many of us are still trying to clean up and rebuild; a process that is likely to take years but the Bahamian people are resilient and have an innate ability to bounce back from some of the most devastating situations and I pray that it will be no different this time.
While the subject of this Bill may not be the most pressing issue for a large percentage of our population today it is nevertheless critical to the well being of about 15% of our population who are employed in the Financial services sector and rely on the sector for their living. The sector includes not only banking in the traditional sense but it also includes the Insurance and Real Estate industries in the Bahamas. It also concerns our middle class as the sector is largely responsible for the creation and maintenance of that segment of our population.
This, THE AUTOMATIC EXCHANGE OF FINANCIAL ACCOUNT INFORMATION BILL, 2016 is the next most important piece of legislation that we are seeking to enact since the Foreign Account Tax Compliance Act (FATCA) which put into effect an inter governmental Agreement for the automatic exchange of tax information between The Commonwealth of The Bahamas and The United States of America. The United States required us to automatically exchange tax information on its citizens and their financial transactions here in this country and now we seek to fulfill the same obligation to our global counterparts who are members of the Organization for Economic Cooperation and Development (OECD). Our imperative from the OECD includes the automatic exchange of information consistent with a new global standard or common reporting standard (CRS) rather than by request which is of course the existing standard for the Bahamas.
The Bahamas is a well established, well regulated, fully compliant jurisdiction and we intend to stay that way. We are serious about our commitment to the OECD and our global partners to exchange information by 2018 and we have elected to do so on a bilateral basis. There is much work to be done to meet the 2018 reporting deadline and to execute, navigate and negotiate using the bi-lateral approach that we have adopted. The bi-lateral as opposed to the multi-lateral approach was determined after much research, thoughtful consideration and consultation. It was favored as the best approach for our existing tax structure, allowing the best opportunity to scrutinize each jurisdiction relative to its data protection mechanisms towards client safety and security. We recognize that the days of secrecy are over. We also recognize that the world now demands transparency. We recognize that citizens who keep their money offshore nonetheless have an obligation to pay their fair share of taxes in their home countries. But we also recognize the dangers inherent in the dissemination of personal information particularly for persons of significant wealth. We are committed to transparency and accountability and to the standards demanded of us by US and European regulators. However, we recognize fully our responsibility to our clients to maintain the highest degree of confidentiality for their safety and our integrity.
The Automatic Exchange of Financial Account Information Bill 2016 of The Bahamas represents a significant step toward The Bahamas’ commitment to the implementation of the global automatic exchange of information (“AEOI”) for tax purposes in 2018. This initiative introduced by the Organization of Economic Cooperation and Development (“OECD”) was developed in response to the G20 request and approved by the OECD Council on 15 July 2014. It calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.
The Standard consists of the following four key parts:
• A model Competent Authority Agreement (CAA), providing the international legal framework for the automatic exchange of CRS information;
• The Common Reporting Standard;
• The Commentaries on the CAA and the CRS; and
• The CRS XML Schema User Guide to aid users
There are currently more than 100 countries that have committed to its implementation, and as of October 2016, and with still almost a year to go until the first exchange date on 30 September 2017, there are now already over 1000 bilateral exchange relationships activated with respect to jurisdictions which have committed to a 2017 timeline.
Mr. Speaker, in preparation for 2018, an Implementation Task Force has been selected comprising of all major stakeholders including the Ministry of Finance as the portfolio Ministry, the Ministry of Financial Services as the coordinating Ministry, The Office of The Attorney General, Bahamas Financial Services Board and other Industry Representatives. This task force has been working assiduously over the last several months to ensure we have a clear path to implementation of the CRS in 2018 with the involvement of all relevant areas of industry. This Task Force has developed an implementation plan and assisted with the development and introduction of the draft AEOI legislation which is now being presented.
The Bill seeks to:
a) to give effect to the Common Reporting Standard;
b) confer the necessary powers on the Competent Authority to enter into Agreements with the government of another country for the automatic exchange of financial account information in tax matters;
c) to ensure the proper administration and enforcement of the Bill; and
d) to ensure the performance of The Bahamas’ obligations in an Agreement made under the Bill.
In order for the work of the Task Force to continue and the for The Bahamas to meet the 2018 implementation deadline of the CRS for the automatic exchange of information, the Automatic Exchange of Financial Account Information Bill 2016 we implore your full cooperation in accepting and passing this legislation unanimously today. It is imperative if we are to show the international community at large as well as the many financial institutions and intermediaries who have invested in The Bahamas that we are serious and committed to compliance with the AEOI initiative. In that vein lists with whom we will be engaging as a priority have been created and invitations have already been extended to many of them to begin negotiations. The List will be made available imminently. In all the circumstances I therefore invite colleagues here including those opposite to consider the on both sides of the isle to put aside political difference and to do what is best for our industry and our people.
Mr. Speaker, our task will not be easy as we have to engage in bilateral negotiations with all countries that we will sign agreements with for the automatic exchange of information. This cannot happen unless the legislation is passed to legally effect implementation of the CRS before the end of the year. Our work on this initiative is key to the survivability of the sector and its importance as the second pillar of our economy. The government has committed to ensure all necessary resources to ensure its success is available and my Ministry is committed to working until it has been completed.
I am confident that like the work that we have done for FATCA that has brought us thus far that we can and will meet our global obligations in 2018.
We have a cadre of educated experienced professionals who have distinguished themselves locally, internationally and globally. The Bahamas offers products that have stood the test of time. Our foundations, trusts, smart funds and now icon demonstrate that we have been creative, innovative and responsive in an increasingly competitive environment. We have overcome the blacklisting of the late 90’s and early 2000s. We are continuously evolving as our legislative agenda conforms to our regulatory obligations on an international and global scale. We are a sovereign jurisdiction and this has allowed us to be nimble and flexible in the face of the ever changing dynamics of this extremely volatile industry. We have persevered but there is much more work to be done. The presentation of this legislation today further demonstrates one of the core philosophies of my Ministry as the coordinating ministry – that is, to do all that is necessary to ensure the full compliance of The Bahamas with established international norms and standards and thus ensure that we remain in a strong position, as the leaders in the region, and strong competitors globally.
Our Mission: a stronger Ministry of Financial Services, a stronger financial services industry; and ultimately a stronger Bahamas.
Seabreeze fully supports this Bill.