CRS: Bahamas Changes from Narrow to Wider Approach
Updated: Mar 2
The Bahamas tax authority recently announced that it no longer plans to follow the narrow approach in CRS compliance. It will instead implement CRS by way of the Multilateral Convention on the Mutual Administrative Assistance in Tax Matters (the Convention) on a non-reciprocal basis.
The biggest impact on Bahamas Financial Institutions (FIs) in the switch from narrow to wider approach is an expansion of CRS due diligence.
CRS Due Diligence
Under CRS, a Reporting Financial Institution (FI) must establish, maintain and apply due diligence procedures to identify Account Holders (and Controlling Persons for certain accounts) who are tax residents in Reportable Jurisdictions.
A Reportable Jurisdiction is one where an agreement is in place requiring sharing of certain account holder data and which is identified on a published list.
Previously, The Bahamas had elected to use a bilateral approach for CRS implementation. This meant that The Bahamas would establish data sharing relationships on a jurisdiction by jurisdiction basis through individually negotiated agreements. A Bahamas FI would only be required to conduct CRS due diligence on those account holders resident in a jurisdiction in which The Bahamas had a bilateral agreement.
In changing to the wider approach, Bahamas FIs will need to expand their CRS due diligence by collecting and retaining CRS information for all account holders regardless of their residency.
Although Bahamas FIs will conduct due diligence across account holders, they will only report on account holders (and any controlling person of the account holder) from those jurisdictions that the Bahamas tax authority publishes as reportable jurisdictions.
Bahamas Reportable Jurisdictions List Not Yet Settled
The Bahamas has not yet signed the Convention. It has, however, shared the list of the eligible pool of jurisdictions with which The Bahamas may automatically exchange information. The list includes 71 jurisdictions.
The Bahamas plans to have a shared FATCA and CRS registration and reporting portal in place for the 2018 reporting season.
More Information to Come
In following the wider approach, The Bahamas will join the majority of other participating CRS jurisdictions.
There are still a number of jurisdictions committed to 2018 CRS reporting that have not yet decided whether to follow the wider approach. It is important to track these jurisdictions for compliance planning.