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FATCA Compliance

What is FATCA?

FATCA stands for The Foreign Account Tax Compliance Act (FATCA) and is legislation of the United States (US) enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act on 18 March 2010. FATCA creates a new information reporting regime for financial institutions outside of the US. 

 

What is the objective of FATCA?

The purpose of FATCA is to discourage tax evasion by the US Person who have placed assets in accounts outside the US – either directly or indirectly through foreign entities such as trusts and corporations.

 

How is the objective of FATCA achieved?

FATCA requires Bahamas Financial Institutions to report information on financial accounts held by US Persons that are their customers. The information Bahamas Financial Institutions are to report is the equivalent to the required information to be reported by US Persons on their US tax returns.

 

The Inter-Governmental Agreement (IGA) entered into between The Bahamas and the US allows for the implementation of the exchange of this information to The Bahamas Competent Authority (BCA). The BCA will forward that information to the Inland Revenue Service (IRS) in the US.

 

The failure of Bahamas Financial Institutions to report means that any account held by that Bahamas Financial Institution domiciled in the US that earns income, will have to pay the US Government a 30% tax on withholding or pass-through payments.

 

What is the impact to the customers?

All individuals and entity customers must be classified so to identify their status as a US Person for US tax purposes (FATCA Status). As a result, there will be further documentation requirements for each customer to complete. The extent of the documentation obligations are primarily driven by the FATCA Status classification.

 

The privacy of our clients is of the utmost importance to Fidelity Bank (Bahamas) Limited. We are committed to keeping customers information, confidential, secure, and private. In complying with FATCA, we will adhere to applicable privacy laws while maintaining high standards of customer privacy and customer service at all times. If you believe that the term “US Person” (described below only as an overview for information purposes and is not intended to serve as legal or tax advice) applies to you, please consult a tax advisor. Fidelity Bank (Bahamas) Limited cannot provide tax advice. You are also encouraged to visit the U.S. Internal Revenue Service (IRS) website at www.irs.gov.

 

A US Person is described as follows:

 

Individuals:

  • An individual that is a US1 citizen.
  • An individual that is a resident of the US for tax purposes.

Entities:

  • A partnership organized in the US or under the laws of the US 
  • A corporation organized in the US or under the laws of the US
  • A trust (or estate) where: (1) a court in the US has authority regarding the trust administration, (2) where a US Person has authority to control all substantial decisions of the trust or (3) it is the estate of a deceased person that is a US citizen or resident of the US for tax purposes.

 

1The term ”US” under the IGA means the United States of America, including the States thereof, but does not include the US Territories (i.e. American Samoa, the Commonwealth of Northern Mariana Islands, Guam, the Commonwealth of Puerto Rico or the US Virgin Islands)

 

What is the impact to Fidelity Bank (Bahamas) Business?

Fidelity Bank (Bahamas) Limited is a participating foreign financial institution (PFFI) and GIIN is 84IUE5.00001.ME.044.

 

PFFI – Account Due Diligence

Fidelity Bank (Bahamas) Limited requires all its customers to self-certify their status as a US Person for tax purposes. Individuals and Entities that are US persons will be required to also submit a W-9 form. Individuals and Entities that are non-U.S. persons with tax obligations in the US, will be required to also submit a W-8 form. Additionally, certain entities are required to register with the IRS and Fidelity Bank (Bahamas) Limited will require evidence of such registration. For more information on registration for FATCA on the U.S. Internal Revenue Service (IRS) portal and list of entity classifications, refer to the IRS’ website at www.irs.gov.

The extent of any further documentation obligations will be primarily driven by the FATCA Status classification specific to the customer.

 

PFFI - Withholding

Where applicable, identify payments derived from sources within the US that are considered withholdable under FATCA; and apply a 30% tax on withholdable payments.

 

PFFI - Report

Fidelity Bank (Bahamas) Limited is required to report annually to the Bahamas Competent Authority, namely, The Finance Secretary in the Ministry of Finance starting 2015.

 

What are the implications of non-compliance?

As a participating FFI, Fidelity Bank (Bahamas) Limited may refuse to conduct business with non-participating foreign institutions (NPFFIs). Further, customers that do not provide requested documentation within the specified time will be deemed recalcitrant under the FATCA regulations and will be considered reportable.

 

If you have any concerns about your tax obligations relating to your Fidelity Bank (Bahamas) Limited account(s), you should consult a professional tax advisor for the relevant country. In addition, the IRS’ website www.irs.gov contains a great deal of information that may be useful for US taxpayers.

 

Please be aware that we are unable to provide any regulatory, tax, or legal advice, but if you have any other questions regarding this letter, you may contact your Financial Center Manager at 356-7764.

 

Legal Name of Member FI Country GIIN
Fidelity Bank & Trust International Bahamas 84IUE5.00000.LE.044
Fidelity Bank (Bahamas) Limited Bahamas 84IUE5.00001.ME.044
Royal Fidelity Merchant Bank & Trust Limited Bahamas 84IUE5.00004.ME.044
Royal Fidelity Capital Markets Limited Bahamas 84IUE5.00006.ME.044
Royal Fidelity Pension & Investment Services Limited Bahamas 84IUE5.00007.ME.044
Fidelity Bank (Cayman) Limited Cayman Islands 84IUE5.00002.ME.136
Fidelity Insurance (Cayman) Limited Cayman Islands 84IUE5.00003.ME.136
Fidelity Pension Services Limited Cayman Islands 84IUE5.00004.ME.136
Royal Fidelity Merchant Bank & Trust Holding St. Lucia 84IUE5.00008.ME.662
Royal Fidelity Merchant Bank & Trust Barbados Barbados 84IUE5.00009.ME.052
Royal Fidelity Capital Markets Barbados Barbados 84IUE5.00010.ME.052