Minister of financial services Ryan Pinder also said that the government of the Bahamas would establish an inter-ministerial committee on FATCA under the leadership of the Ministry of Financial Services to prepare an implementation strategy for FATCA, which would oversee all aspects of FATCA compliance and necessary legislative reforms.

Pinder said that the government of the Bahamas had decided to adopt the Model 1 FATCA agreement as it provided the greatest level of preferential treatment in terms of exemptions for key Bahamian products and should result in lower costs and reporting burdens to Bahamian FFIs.

“While Model 1 requires that a reporting infrastructure be developed within the competent authority, such an infrastructure may be necessary in the long-run given international developments in tax cooperation. Additionally, the government has been advised that establishing such a report infrastructure should not be prohibitively expensive," Pinder said.

He added that while Model 1 and Model 2 agreements both "pierce the veil of confidentiality," Model 1 provides the greatest control for the Bahamas government and its financial institutions over interactions between the IRS and Bahamian financial institutions.

FATCA was introduced on January 1, 2013, and requires all FFIs to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.  

Model 1 IGA (issued in July 2012) highlights and benefits include: a relaxation of deadlines; simplified due diligence; and increased clarity around due diligence with country specific provisions, as stated on the Thomson Reuters website.

The Organization for Economic Co-operation and Development, the group of major industrialized nations, also recently issued a “peer review” report on 13 jurisdictions, including the Bahamas, to show the progress they are making to stamp out tax evasion.

The OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes’ report will send its review to feed into ratings assigned to 50 jurisdictions later in the year.

In what was a positive report for the offshore center, the Phase 2 review for the Bahamas confirmed that "the competent authority is well organized with adequate internal processes in place for handling EOI requests" and was an "important and reliable EOI partner."