Bahamas financial sector under threat from high cost of implementing FATCA legislation

bahamas-flag-400NASSAU, Bahamas, Thursday October 30, 2014, CMC – The Bahamas has warned that the high costs associated with the US Foreign Account Tax Compliance Act (FATCA) are threatening to undermine the financial services industry within many member states of the Caribbean Community (CARICOM).

“All member states must undertake legislative amendments, institutional reform and human resource retraining to comply with the Act. Technical assistance to address these concerns need to be explored,” said Ryan Pinder, the Minister of Financial Services.

Addressing the sixth CARICOM-United States Trade and Investment Council meeting here, Pinder said while most CARICOM member states have signaled their intention to sign reciprocal Inter Governmental Agreements with the United States, The Bahamas has opted to sign a non reciprocal Inter Governmental Agreement.

“However, the high costs associated with compliance with the US Foreign Account Tax Compliance Act which aims to combat tax evasion by US persons with non US accounts, threatens to undermine the financial services industry within many member states,” he told the meeting.

Pinder said that the meeting provides an opportunity for senior officials from the Caribbean and the United States to provide updates on issues that affect trade between them.

He said there would be discussions on the status of the applications of some CARICOM countries seeking to receive beneficiary status under the Caribbean Basin Partnership Trade Agreement (CBTPA). Pinder said the agreement expands the items that can receive preferential treatment under the Caribbean Basin Economic Recovery Act, and provides CBI beneficiary countries with the possibility for increased market access into the US market.

“However, as beneficiary status under the CBTPA is not automatic but must be approved, The Bahamas and five other CARICOM member states have applied to receive beneficiary status.”

But he noted that “those discussions are being tied to US concerns about the lack of protection of intellectual property rights in some member states and the unauthorized retransmission of US produced programming and unauthorized and uncompensated use of music.

“While The Bahamas has addressed US concerns in this area, the issue remains an unresolved concern by both sides. The meeting…provides an opportunity for the two sides to continue dialogue on these important issues,” he said.

Pinder said that The Bahamas was also concerned about initiatives in the United States to designate queen conch as an endangered species.

“We note that the National Oceanic and Atmospheric Administration (NOAA) will be delivering its ruling on this matter on 3rd November 2014. The Bahamas wishes to note that the queen conch has been harvested in many member states including The Bahamas for centuries and many depend on its harvesting for their livelihood.”

He said also that experts have noted that CARICOM countries are the main suppliers of queen conch on the international market and that 80 per cent of all queen conch meat is imported into the United States. “Attempts to have the queen conch listed as threatened or endangered under the US Endangered Species Act (ESA) would cause significant social and economic hardship for thousands of fishermen in the Caribbean including The Bahamas and has the potential to undermine the peace and stability of communities that depend on fishing this resource for income and their livelihoods.

“This is especially true here in the Bahamas. We have an annual export quota on conch from the Bahamas. Many small commercial fishermen depend on the small conch exports to support their families and businesses. We support sustainable and well regulated harvest and export of conch,” he said.

Pinder said a similar threat exists to the competiveness of Caribbean rum in the US market as a result of the subsidies provided by the governments of the US Virgin Islands and Puerto Rico to rum producers.

He said the negative impact of the subsidies on the economies of the region and the livelihood of many, needs to also be addressed.

“We have re-committed our presence in the rum producing industry with John Watllings Distillery who has significant interest in the export market. This is a ripe issue for the Bahamas and we look forward to meaningful progress,” he added.

Pinder said he was also looking forward to an amicable solution to the ongoing Internet gaming dispute between the United States and Antigua and Barbuda.

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