FATCA in Bermuda

• Bermuda turned out to be the 33rd signatory of the Multilateral Competent Authority Agreement for the automatic exchange of Country-by-Country reports (CBC MCAA), which is based on the Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and puts in place the automatic exchange framework for exchanging Country-by-Country Reports, as contemplated by BEPS Action 13.
• In the CBC MCAA, the tax administrations where a company operates were to get aggregate information annually, starting with 2016 accounts, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within a multinational enterprise group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
• The information has been collected by the country of residence of the parent of the MNE group, and will then be exchanged in accordance with the agreements now also signed by Bermuda. First exchanges will start in 2017-2018 on 2016 information. In case information fails to be exchanged, the BEPS Action 13 report provides for alternative filing so that the playing field is leveled.

US FATCA

• On 19th December 2013, Bermuda signed an IGA Model 2 with the United States to implement the law, FATCA. Under an IGA Model 2, the U.S. and the FATCA partner enter into an IGA whereby the FATCA partner would agree to implement legislation to guide and enable the Foreign Financial Institutions in its jurisdiction to collect and report information required under FATCA (including Specified U.S. Persons) directly to the IRS. It is important to note Bermuda law already enables FFIs in its jurisdiction to collect and report the FATCA required information directly to the IRS. It is so since there is no Bermuda law conflict that prevents the FFIs from doing so, unlike in those countries that do have conflicting laws that fail to enable FFIs to report directly to the IRS and therefore are bound to adopt IGA Model 1. Hence, in case of Bermuda, Bermuda only needed some amendments in its law so as to direct FFIs in its jurisdiction to abide by the US’s FATCA Regulations as may be modified by the IGA Model 2 and to impose a fine and or penalty when the FFIs do not. Such fine and or penalty would be sufficient to serve as a deterrent to the non-compliance. The IGA Model 2 for implementing FATCA is primarily aimed for use by those FATCA partners that have little to no local law conflicts with FATCA and where there is no requirement of the substantial local legislation.
• IGA Model 2 states that the FFIs in such FATCA partnerships enter into an FFI agreement with the IRS. Such FFI agreements introduce obligations that are almost the same to the obligations on FFIs under an IGA Model 1 who comply with the IRS registration requirement.

BENEFICIAL OWNERSHIP REGISTRY AND INFORMATION SHARING

• Bermuda remains at the forefront of the issue of beneficial ownership that maintained an accessible register of the beneficial owners of all the Bermuda companies since the end of World War II.
• The information on the Bermuda list has been made available to any competent authority pursuing the legitimate inquiries of the affairs of its citizens.
• A requirement of the Bermuda Government which dates back to the 1940s included a mandate that required the disclosure of the proposed ultimate beneficial owners of a prospective business at the time of application. The applicants must make the information available to central authorities. This should be the Bermuda Monetary Authority.
• Bermuda has an agreement with the British National Crime Agency, which is known as the NCA, for sharing beneficial ownership data held in Bermuda with the NCA with a turnaround time of 24 hours, and on an emergency basis a turn-around time of one hour.