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Barbados FATCA Compliance Requirements Come into Force: A Look at the Regulations

In a bid to comply with international tax regulations, Barbados signed an intergovernmental agreement (IGA) with the United States of America (USA) on November 17th, 2014, to implement the Foreign Account Tax Compliance Act (FATCA). To make FATCA effective within its domestic legislative framework, the Income Tax (Automatic Exchange of Information) Regulations 2017 were enacted.

Overview of the Regulations

These regulations govern the exchange of FATCA information and set out the obligations of financial institutions that fall under their scope. They specify rules on:

• The collection and reporting of information by financial institutions
• The necessary information technology and administrative capabilities to facilitate the implementation of FATCA
• Enabling Barbados’ domestic implementation of the Global Standard for Automatic Exchange of Financial Information in Tax Matters (AEOI) under the Organisation for Economic Co-operation and Development (OECD) and the Global Forum on Transparency and Exchange of Information for Tax purposes

The AEOI: Components and Functionality

The AEOI consists of two components:

• Common Reporting Standards (CRS): outlines reporting and due diligence rules to be imposed on financial institutions
• Model Competent Authority Agreement (Model CAA): sets out detailed rules on the exchange of information

Benefits of Domestic Implementation

With the domestic implementation of CRS and Model CAA in place, Barbados can now automatically exchange information with its partner countries and implement measures to ensure:

• The highest standards of confidentiality
• Data safeguards are maintained

This development marks an important step towards increasing transparency and cooperation between nations in the fight against tax evasion and avoidance.