International Initiatives Impacting the Bahamian Financial Services - - PowerPoint PPT Presentation

International Initiatives Impacting the Bahamian Financial Services Sector

Stephen Coakley Wells Director, Regulatory and International Affairs Office Of the Financial Secretary Ministry of Finance Presented at the Bahamas Financial Services Board Financial Services Bootcamp September 10th 2019

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Topics

EU/OECD Initiatives FATF Update The Road Ahead

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The New Model Of International Tax Governance

• Global Standards
• Multilateral

Agreements

• International

Coordination

• OECD/G20
• EU
• UN

Bringing the World to the table

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OECD/G20

Global Forum on Transparency and Exchange of Information for Tax Purposes

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Base Erosion Profit Shifting (BEPS)

4 Minimum standards 11 Best practices 1 Multilateral Convention

4 BEPS minimum standards Harmful tax practices (preferential regimes / exchange of tax rulings) – Action 5 Treaty shopping – Action 6 Country-by-Country (CbC) reporting – Action 13 Mutual agreement procedures – Action 14

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Multilateral Convention on Mutual Administrative Assistance in Tax Matters Exchange of tax information Common Reporting Standard

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters allows all relevant jurisdictions to exchange information in tax matters in line with the most up to date international standards. Currently, there are over 115 jurisdictions participating in the Convention. Automatic exchange of information is the systematic and periodic transmission of tax information by countries to the residence country concerning various categories of income, such as dividends, interest, gross proceeds, royalties, salaries, pensions, etc. Under the Common Reporting Standard (CRS jurisidctions obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.

TAX TRANSPARENCY

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EUROPEAN UNION

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Tax Transparency Fair Taxation Exchange of Information EU Listing Criteria

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BEPS Minimum Standards

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The Bahamas Compliance - OECD

BEPS Existence of any harmful tax practices (Action 5) not harmful (no or only nominal tax jurisdiction) Fully Equipped Monitoring Mechanism review scheduled Preventing treaty abuse (Action 6) review scheduled CbC – Domestic law (Action 13) legal framework in place CbC – Information exchange network (Action 13) not activated Inclusive Framework on BEPS member yes Effective dispute resolution (Action 14) review pending Exchange of information on request (EOIR) Global Forum Member yes EOIR rating round 1 largely compliant EOIR rating round 2 largely compliant Automatic exchange of information (AEOI) Commitment to AEOI (CRS) 2017/2018 CRS MCAA signed yes Mutual Administrative Assistance Convention in force

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The Bahamas Compliance - EU

• Legislative measures

introduced in December 2018 to address EU’s Criterion 2.2.

• The Bahamas not included on

Annex I of EU List of Non Cooperative Jurisdictions for Tax Purposes.

• The Bahamas remains on Annex

II, the ‘Grey List’, and will be monitored for implementation

• f substance requirements for

CIVs.

• Ongoing monitoring of the

implementation and the effectiveness of The Bahamas’ measures.

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Substance Reporting

CESRA Reporting

 Reporting for CESRA is to be done through an online

portal, which is currently being developed.

 We anticipate portal being active in Q4 for reporting in

2020.

 Forms A-D are being amalgamated into a single "smart"

form which will generate the pertinent questions for included entities, holding companies and non included entities, in response to answers given by the user.

Reporting Timelines

 There is no need to report for substance for the 2018

fiscal year.

 Entities should report for the 2019 fiscal year, within 9

months of the 2019 year end.

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FATF Update

TECHNICAL COMPLIANCE WITH FAFT 40 RECOMMENDATIONS.

• The Bahamas was found to be deficient in 22 of the FATF

recommendations and sought to address the deficiencies upon release of the official CFATF Mutual Evaluation report in July 2017.

• A total review of the AML/CFT/CFP regime was carried out and

several laws were enacted or strengthened to bring the country into compliance with FATF 40 recommendations released in 2012.

• CFATF in November 2018 favorably re-rated The Bahamas

compliance with 13 of the 22 FATF recommendations identified with deficiencies.

• The Bahamas currently is largely compliant or compliant with 30

FATF Recommendations.

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FATF Update

IMPLEMENTATION OF LEGAL, REGULATORY AND ENFORCEMENT FRAMEWORK.

• The Bahamas was found deficient in the implementation of an

effective AML/CFT/CFP framework in its 2015 MER.

• FTRA , 2018, POCA 2018, ATA, 2018 and the enhancements to the

ATA Regulations, and the IOEAMA, 1993 now address all technical AML/CFT/CFP deficiencies.

• Enforcement strengthened through administrative fines applicable

for breaches of FTRA 2018, enhanced Compliance Commission powers, and risk management requirements and building the capacity of the FIU.

• Entities not complying with the statutory requirements of the

Companies Act are also being monitored and penalized. Over 11,000 companies were struck off the register in August, 2019 with another 20,000 pending to be struck off.

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• A. Ongoing Discussions with EU/OECD
• a. Substance requirements for CIVs
• b. Mandatory Disclosures
• c. Enhanced Transparency
• d. Taxation of the Digital Economy

Framework

• e. Action 14 Review – OECD
• f. Fully Equipped Monitoring Mechanism

Review – OECD

The Road Ahead

• B. CESRA Amendments
• a. s. 4 & s. 5. Definition of Relevant

Activities & CIGA

• b. Intellectual Property definition
• c. Holding property definition
• d. Requirement to register and obtain

TIN

• C. CESRA Guidelines Amendments
• a. Definition of outsourcing to

clarify double counting

THANK YOU!