Video: US, Bermuda Sign FATCA Tax Agreement

December 19, 2013

Today [Dec 19] U.S. Consul General to Bermuda Robert Settje and Minister of Finance Bob Richards signed an intergovernmental agreement to implement the Foreign Account Tax Compliance Act [FATCA] to promote transparency on tax matters.

Bermuda, December 19 2013-1

Minister Richards said, “Bermuda is now among the leading small jurisdictions in the area of international cooperation on tax matters, with over 60 tax transparency agreements when counting Bermuda’s 41 bilateral transparency agreements [TIEAS] and our new multilateral tax transparency agreement partners.

“Our signing today of the US FATCA IGA Model 2 emphasizes Bermuda’s commitment to international cooperation in tax matters to fight against cross boarder abuse of tax laws.”

Bermuda, December 19 2013-2

U.S. Consul General Settje, who signed on behalf of the United States, stated, “I would like to thank the Government of Bermuda for cooperating with the United States in implementing FATCA.

“Doing so continues the long tradition of friendship and collaboration that marks the United States-Bermuda relationship. Together we can improve international tax transparency and compliance by further building on that relationship.”

The Bermuda FATCA agreement calls for foreign financial institutions [FFIs] to identify and annually report key information about U.S. account holders directly to the U.S. Internal Revenue Service.

FFIs that do not provide the FATCA information will become subject to a 30 percent withholding tax on certain U.S. source payments, such as interest payments.

Bermuda has chosen the type of FATCA agreement that requires FFIs to report the specified information about U.S. account holders directly to the U.S. Internal Revenue Service, rather than indirectly through the Bermuda authorities.

-The full FACTA agreement can be read here [PDF] and Minister Richards remarks follow below:

Distinguished guests today I am pleased to welcome my good friend the Honourable Mr. Robert Settje, a distinguished career diplomat in the United States of America Foreign Service and currently the U.S. Consul General in Bermuda. We are here to sign the Foreign Account Compliance Act Regulations (FATCA) agreement between the Government of the United States of America and the Government of Bermuda.

On this occasion I recall the statement made by US Treasury official Mr. Robert Stack following the completion of the FATCA negotiations earlier this year when he said:

“We welcome the conclusion of negotiations with Bermuda on a Model 2 Intergovernmental Agreement to implement FATCA and join our efforts to curtail tax evasion. We are particularly pleased to build upon our decades-old Tax Information Exchange Agreement relationship with Bermuda and the recent Mutual Legal Assistance Treaty. And:

“We appreciate Bermuda’s role as a leader in global tax transparency as well as their role serving alongside the US on the Steering Group of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes”

The average Bermudian may well ask “What is the FATCA all about, and what does it mean to me?”

The US Treasury enacted provisions commonly known as the Foreign Account Tax Compliance Act Regulations or “FATCA”, which introduced a reporting system for financial institutions to report to the US IRS, certain accounts involving US persons.

In order to further assist financial institutions around the World with FATCA reporting, the US Treasury created intergovernmental agreements commonly referred to as IGAs.

It is every country’s sovereign right to design or adjust their tax collection system. Bermuda’s responsibility, as a responsible and respected international financial center in the global financial system, is to respect that right – just as we expect others to respect our tax system, a system which is over 100 years old. Ours is primarily a consumption based tax collection system.

This historic tax agreement builds upon a rich history of cooperation and friendship Bermuda has had with the United States of America from the beginning.

Our first ‘agreement’, albeit quite unofficial, was made by Bermudians for the purpose of protecting cross border trade relations with our American neighbours, the agreement made in 1775, by some Bermudian businessmen to provide gunpowder to General George Washington of the Continental Congress in his time of need. In the 20th Century the Destroyers for Bases Agreement in 1940 between President Roosevelt and Prime Minister Churchill that saw Bermudians give up significant portions of our small Island home to facilitate the USA air force base at Kindley Field, and the US Navy base at what is now Morgan’s Point. However, those bases which closed in the 1990’s, were the single most important factor that propelled the living standards of Bermudians to first world ranking.

To underscore the importance of our friendship, the US Congress in the early 1980s moved to recognize Bermuda as a friendly nation when agreeing to extend to Bermuda the Caribbean basin initiative which laid the foundation for the 1986 tax treaty with the US to be signed.

The 1986 Tax Treaty was built upon that long established friendship and was the first tax agreement between our countries, signed on the 11th of July 1986, by Bermuda’s then Premier the Honourable Sir John W. Swan and John C. Whitehead, the then US Deputy Secretary of State in President Ronald Reagan’s administration under the Secretary of State, George Shultz. The 1986 tax treaty facilitated Bermuda developing the twin pillars of our economy you see today, international business and tourism.

Consul General Settje, Bermuda is now among the leading small jurisdictions in the area of international cooperation on tax matters, with over 60 tax transparency agreements when counting Bermuda’s 41 bilateral transparency agreements (TIEAS) and our new multilateral tax transparency agreement partners.

Our signing today of the US FATCA IGA Model 2 emphasizes Bermuda’s commitment to international cooperation in tax matters to fight against cross boarder abuse of tax laws.

In closing I would like to thank our many Bermuda industry stakeholders who rallied to my call for assistance and consultation by participating on our FATCA Committee. I make special mention of those industry individuals who travelled with our Ministry of Finance officials to Washington DC at their own expense to participate in the negotiations;

• Mr. Mike Murphy, a respected tax expert,
• Ms. Kiernan Bell, of law firm Appleby
• Mr. Lyndon Quinn, of HSBC Bank Bermuda.

Other industry persons on the negotiating team assisting Ministry of Financial officials were;

• Paul Eldridge of PWC,
• Colm Homan of PWC, James Berry of KPMG,
• Charles Thresh of KPMG and
• our Washington DC based tax attorney Mr. Alan Granwell.

Consul General Settje it is my pleasure as Minister of Finance to invite you to sign the US FATCA IGA Model 2 but before you do I invite you to say a few words.

Thank you

-

Share via email

Read More About

Category: All, Business, News, Politics, Videos

Comments (13)

Trackback URL | Comments RSS Feed

  1. terry says:

    Anything in there about NSA?
    Shalom.

  2. CommonSense says:

    Well done OBA!

  3. Whistling Frog says:

    I hope this allows for more companies to do business in BDA. Sign um up Bob…

  4. Gopher says:

    The bases were the single most important factor that propelled the living standards of Bermudians to first world ranking??????????????????

  5. Bermuda123 says:

    Congratulations Bob in leading the way for small jurisdictions and taking the lead on the pejorative “tax haven” label which the uninformed headline makers around the world like to put on Bermuda. Great job

  6. Rhonda Neil says:

    sadly I don’t think many OBAers understand what this means… Bermuda is a Tax Haven AKA low taxed jurisdiction… this will make it more difficult for Americans to hide their wealth here in Bermuda.. will the effect be an increased business, a decline in business or no effect at all…

    on another note, well done OBA, yah right…we are a colony aka overseas territory… we had no choice in the matter…. Well!! maybe self determination… but that is for another day…

    • jt says:

      You claim others don’t know what this means and then state that you don’t.
      Do you have any evidence to suggest that the U.K. required us to sign this?
      Self determination – I definitely agree – for another day.

  7. Rhonda Neil says:

    Re read, jt. This time to understand, and not just to respond.

    • jt says:

      What’s in print is clear – if you’ve got a cryptic meaning we’re supposed to uncode…….well……

  8. Deckard1138 says:

    FATCA is a global disaster and Bermuda is just the latest country to foolishly capitulate to U.S. financial imperialism. Bermudians will rue the day that this agreement was signed once they fully understand its consequences.