Representatives from the US Treasury and Internal Revenue Service (IRS) are seeking to reassure the financial sector ahead of the implementation of the US Foreign Account Tax Compliance Act (FATCA), which is due to come into full force next year.

At a regional FATCA conference held in Nassau yesterday, Danielle Rolfes (pictured, left), International Tax Counsel with the US Treasury, told members of the Bahamas’ financial community that the new legislation was the result of extensive consulation with the private sector and had been drafted to minimize the administrative burden where possible.

“We are keenly aware that FATCA imposes new requirements on financial institutions [and] we have had ongoing dialogue with the financial community,” she said. “We think we have gotten FATCA to a place where it can be implemented without being overly burdensome. Wherever possible, we have tried to build on existing practices.”

Under FATCA, foreign financial institutions (FFIs) are forced to disclose information on their US accounts to the US Treasury.

Governments can follow two reporting models when adhering to FATCA. The first Inter-Government Agreement (IGA) allows for FFIs to disclose the necessary information to their government which, in turn, is then passed on by that government to the US Treasury. The second IGA allows for FFIs to report directly to the US Treasury themselves. The Bahamas has not yet confirmed which model it will follow.

To date, Ireland, the UK, Switzerland, Mexico and Denmark have all signed IGAs with the US government and Rolfes said that 75 more agreements are currently being considered.

International deputy commissioner with the IRS, Michael Danilack (pictured, right), said that the US government was in the final stages of launching the electronic portal through which FFIs will be able to register and submit information.

He said that the web portal would be accessible from July this year and would be available on the IRS’ website. FFIs will be able to log on, fill in their details and obtain a Global Intermediary Indentification Number.

cmorris@dupuch.com