The Bahamas’ Cabinet has approved proposal put forward by the country’s Ministry of Financial Services to go with a Model 1 Intergovernmental Agreement (IGA) for Foreign Account Tax Compliance Act (FATCA) implementation.

Bahamian financial services sector had already indicated its preference for the first of the two IGA models.

Negotiations in this respect are expected to commence immediately.

The provisions under the US Hiring Incentives to Restore Employment (HIRE) Act commonly known as FATCA became law in March 2010.

The law targets tax non-compliance by US taxpayers with foreign accounts; effectively, it requires Foreign Financial Institutions (FFIs) to obtain and report information regarding US customers and beneficial owners to the Internal Revenue Service) (IRS) or suffer 30% withholding tax on US sourced income.