The Barbados Revenue Authority (BRA) has found that some local financial institutions are falling short of the procedural requirements needed to effectively share specific financial account information for tax purposes as the country has committed to external authorities.
As a result, the state agency has issued new instructions “to provide clarity to reporting Barbados financial institutions (RBFIs) on some of the main items that should be included in a procedures manual”.
The BRA is also advising RBFIs to adopt the best practices related to access to documentation, training and development of staff, and periodic evaluations.
This information was communicated in a guidance note on the Common Reporting Standard (CRS) and Foreign Accounts Tax Compliance Act (FATCA), with specific focus on procedural manual requirements. The information was circulated in October by the BRA’s Global Relations Unit.
In the recent guidance note, the BRA said: “The Global Relations Unit of the Authority, during the course of its compliance activities, desk-based and onsite audits related to the FATCA and the CRS, observed that several RBFIs either do not possess or lack sufficient documented internal procedural manuals to support the effective implementation of FATCA and CRS.
“Based on the findings, to date, the absence of such documentation has contributed to gaps in staff awareness and understanding among staff responsible for the implementation of automatic exchange of information regimes (AEOI).”
The BRA added: “In addition, in some cases, the Authority has identified significant implementation deficiencies, particularly following the departure or transfer of key personnel. These issues underscore the importance of maintaining clearly documented procedural manuals to ensure the continuity and effectiveness of FATCA and CRS compliance.
“Consequently, to guarantee the effective and consistent implementation of the AEOI regime, the Authority considers it essential and in line with international best practices that all RBFIs must have documented procedures.
“This expectation is both justified and essential, as it aids RBFIs in fulfilling their reporting and due diligence responsibilities under the AEOI legal framework, while also reducing the risk of non-compliance,” it noted.
Specific information
The Organisation for Economic Cooperation and Development’s CRS is an international standard for the automatic exchange of financial account information for tax purposes.
Under the CRS, RBFIs “are required to obtain specific financial account information for residents of jurisdictions with which Barbados has agreed to exchange such information”.
This information is to be reported to the BRA “for exchange on an annual basis with the relevant reportable jurisdictions”.
Following a November 17, 2014, FATCA agreement with the US, Barbados agreed to automatically exchange information with the US Internal Revenue Service concerning financial accounts held by RBFI with respect to US reportable accounts. This information is to be reported to the BRA for exchange on an annual basis with the relevant reportable jurisdictions.
The BRA guidance note outlined 17 areas of “minimum content that should be included in each RBFI’s procedural manual for FATCA and CRS purposes”.
It is requiring that RBFIs have procedural manuals that include an overview of FATCA and CRS, including the applicable legal framework; process for extracting the data for FATCA and CRS reporting and the appropriate oversight and quality control mechanisms to ensure that the prescribed information is captured and the information is complete; policies prescribing the frequency and types of mandatory training for staff responsible for implementing the AEOI Standards in practice and the manner in which such training should be recorded; procedures to address any attempts to circumvent the requirements of CRS and FATCA; and frequency in which the manual should be reviewed and updated where appropriate, among other mandates.
The BRA also wants RBFIs to “ensure that all relevant personnel have access to the up-to-date documentation relating to FATCA and CRS, including the procedural manual and self-certification forms”.
“In addition, access to all relevant documentation relating to the implementation, compliance and maintenance of FATCA and CRS,” the Government agency said.
RBFIs are also being asked to “conduct mandatory training on at least an annual basis with employees involved in all steps of AEOI implementation including onboarding, document validation and compliance [and] such training should be recorded and logged for audit purposes”.
The BRA further called for an ongoing assessment of updates and guidance issued by the Global Forum on Transparency and Exchange of Information for Tax Purposes, the US IRS and the BRA “to ensure timely incorporation of relevant changes into the procedural documents”.
It said the process “should be recorded in the procedural document”. (SC)
