On 17th November, 2014 Barbados signed an intergovernmental agreement (“the IGA”) with the United States of America (“USA”) for the implementation of the Foreign Account Tax Compliance Act (“FATCA”).
As an international tax instrument FATCA needed to be incorporated into Barbados’ domestic law in order to have effect. The Income Tax (Automatic Exchange of Information) Regulations 2017 (“the Regulations”) were therefore enacted to facilitate the implementation of FATCA within Barbados’ domestic legislative framework.
The Regulations govern the exchange of FATCA information and set out the obligations of the financial institutions to which the Regulations apply and specify rules on the collection and reporting of information by Financial Institutions, Information Technology and Administration capabilities.
The Regulations also facilitate domestic implementation of the Global Standard for Automatic Exchange of Financial Information in Tax Matters (“AEOI”) under the OECD and the Global Forum on Transparency and Exchange of Information for Tax purposes.
The AEOI consists of two components: (I) the Common Reporting Standards (“CRS”), which contains the reporting and due diligence rules to be imposed on financial institutions; and (II) the Model Competent Authority Agreement (“Model CAA”), which contains the detailed rules on the exchange of information.
The AEOI is based on a fully reciprocal automatic exchange of information system from which USA specificities have been removed. The domestic implementation of the CRS and Model CAA enables the automatic exchange of information between Barbados and its exchange partners and provides measures to ensure the highest standards of confidentiality and data safeguards.