• Global Forum on Transparency and Exchange of Information for Tax Purposes: How do countries rate
• Automatic Exchange of Information: the next step
• Addressing Base Erosion and Profit Shifting

This report consists of two parts:

Part I is the Progress Report to the G20 by the Global Forum on Transparency and Exchange of Information for Tax Purposes, in response to the G20 Finance Ministers request expressed in November 2012 and reiterated in February 2013.

Part II is a report by the OECD on current tax work of relevance to tackle offshore tax evasion and tax avoidance.

The published report emphasises that the views expressed are those of the staff team and do not necessarily reflect the views of the Government of The Bahamas or the Executive Board of the IMF. Some highlights:

• The Bahamian financial system faces no obvious near-term threats to financial stability. The onshore banking system is well capitalized, liquid, and profitable. Credit risk, particularly for mortgages, will need to be monitored closely in view of existing high non-performing loan (NPL) rates and ongoing economic uncertainties. Stress tests show that the onshore banks can withstand severe shocks to solvency and liquidity.

• The offshore financial sector is very large, with total offshore bank assets equivalent to 75 times GDP at end-2011, although this mainly reflects large treasury operations of global banks intermediated through the system. Interconnections are predominantly between offshore banks and their foreign parents, and strict firewalls protect the domestic economy and financial system from the offshore sector. A lack of detailed data prevented a more complete assessment of this sector, including stress testing or the calculation of financial soundness indicators.

• Financial system oversight has improved greatly over the last decade and the authorities continue to act with resolve on a wide variety of fronts to institute further improvements. However, further strengthening is needed to ensure the financial system remains robust well into the future, particularly in insurance and securities where relatively new legislation is in place, and in pensions, where governing legislation is pending. The offshore sector is supervised on the same principles as the onshore sector, but the vast majority of assets are held in branches and therefore not subject to local capital requirements.

• The crisis management and financial safety net framework has not been tested and is in need ofmodernization.

The IMF also published the latest Article IV Consultation Report. Thomas Hockin, Executive Director for The Bahamas and Carlos Alberto de Resende, Alternate Executive Director state:

“On behalf of our Bahamian authorities, we continue to appreciate the policy discussions with the Fund. We welcome the thorough and balanced assessment of the country’s economic situation and financial system made by the Article IV and FSAP mission. We are particularly satisfied with the recognition of the country’s strong bank supervision framework and that risks to financial stability are minimal.

Although we broadly agree with the staff’s assessment of the medium-term challenges facing the authorities, we emphasize the need for a balanced approach between fiscal sustainability and policies to foster inclusive growth and diversification of the economy. This is particularly important in light of the high unemployment rate and the high-cost infrastructural development that is typical of economies based in geographically dispersed archipelagos, such as The Bahamas.

The report outlines a sensible set of policy options, mostly in tune with initiatives already being implemented or in the process of being implemented by the authorities, such as the tax and public financial management reforms.”

Summary: Emerging-market fortunes differ from those in mature markets in terms of the openness of ultra high net worth individuals (UHNWIs) about their holdings and fortunes, as well as their countrymen’s attitudes toward gathering wealth. Although entrepreneurs from emerging markets have made impressive strides in building global companies, they are still at a disadvantage in terms of creating global brands. Because their fortunes are mostly first generation, the personal money management practices in the emerging markets are also at an earlier stage than in mature markets.

London, New York, Hong Kong and Singapore remain the top four centres.

GFCI 13 says offshore centres suffered significant reputational damage in 2008 and 2009. "They have been recovering since GFCI 10. GFCI 13 shows good progress in ratings for all offshore centres, though most experience relative declines in rankings since other financial centres have progressed."

Jersey and Guernsey remain the leading centres followed by Monaco which ranks 35th, up 25 places.

The Wealth Report provides the definitive global perspective on prime property and wealth. It includes a guide to the performance of the world’s key luxury residential markets and HNWI growth forecasts over the next decade for over 80 countries and cities.

The focus of the Symposium, however, was specifically on the Foreign Account Tax Compliance Act (FATCA), signed into law in March 2010 as provisions under the Hiring Incentives to Restore Employment Act (HIRE). “Simply put”, said Ms. Allen, “this is a reporting mechanism for any US owned or controlled accounts - with harsh consequences for non compliance.”

The Hon. Ryan Pinder, Minister of Financial Services noted that the implementation and compliance with FATCA is one of the most pressing matters with respect to compliance matters in the financial services industry. He stressed that the private sector has significant responsibility for implementation, and the Government has a certain responsibility as well. On the latter, he observed that the Government has the responsibility to determine the best method in which information is to be transmitted to the United States authorities. “Proper consultation and disciplined analysis is required in order to make a reasoned decision. One thing I do have confidence in is that we have the talent in the industry to do the right thing,” said Minister Pinder.

The Agenda focussed primarily on a Case Study approach to the impact of FATCA provisions on various key sectors of the industry, ending with an overview of the legal implications of the Intergovernmental Agreements (IGA):

Remarks │The Hon. L. Ryan Pinder, M.P., Minister of Financial Services

Practical Implications/Case Studies - Sector Approach

• Wealth Management │Lawrence Lewis, Partner, Deloitte Bahamas

• Insurance │Chris Maiato, Ernst & Young Advisory Leader for The Bahamas, Bermuda, BVI and Cayman Islands (BBC) region

• Funds & Securities │David Conen, Tax Director, KPMG Cayman Islands

• Retail Banking: Paul Eldridge, Managing Director, Bermuda Tax Practice, PricewaterhouseCoopers

Intergovernmental Agreements – Legal Implications: Steven L. Cantor, Managing Partner, Cantor & Webb, P.A. and Iyandra Bryan, Associate, Higgs & Johnson

See below for the various presentations.

The half-day seminar was hosted in collaboration with the Ministry of Financial Services and the Professional Industry Associations, and co-sponsored by Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers. The “Big 4” provided FATCA experts as panel resources.

Photo Caption: Symposium Presenters with BFSB CEO. Left to right: David Conen, Lawrence Lewis, Steven Cantor, Chris Maiato, BFSB CEO Aliya Allen, Paul Eldridge, Iyandra Bryan.

"The economic performance of Latin America and the Caribbean in 2012 and 2013 is largely subject to the form taken by adjustment processes in developed countries, as well as the slowdown in China. It will also be dependent on the region's own response capacity", indicated Alicia Bárcena, Executive Secretary of ECLAC, as she presented the report.

The findings of the Economic Survey 2012 indicate that the majority of South American and Central American countries (plus Mexico) will have GDP growth rates in 2012 that are similar or slightly lower than those in 2011, because of the increase in consumption and, to a lesser extent, the growth in investment. Argentina and Brazil, however, which account for a considerable proportion of the region's weighted GDP, will have slower growth than the rest (2.0% and 1.6%, respectively). This explains most of the reduction in the region's growth in 2012 compared with 2011 (when it was 4.3%).

The scenario predicted for 2013 includes a continuation of the slight downward growth trend for most South American countries, as they are more dependent on commodity exports to China, with growth similar to 2012 levels for Mexico and Central American countries. In the Caribbean, the recovery will be gradual, with growth rates slightly higher than in 2012 in countries that are the most dependent on tourism.

• Only 49% of respondents based in London now feel that London will become more competitive over the next three years. This compares with 63% of respondents based elsewhere in Europe, 73% of respondents based in Asia and 77% of respondents based in offshore centres.

• The Euro crisis continues to be reflected in the GFCI ratings of the financial centres within the weaker Euro economies. Madrid, Lisbon, Dublin and Athens were all down in GFCI 10 and GFCI 11. These declines have continued in GFCI 12. Frankfurt and Paris both rose slightly in GFCI 11 but GFCI 12 sees a reversal of these gains. There have however, been some improvements in Europe. Geneva has now re-entered the GFCI top ten.

• The past trend of large rises in the ratings of Asia/Pacific centres appears to have ended. Hong Kong, Singapore, Tokyo, Shanghai, Beijing, Taipei and Shenzhen all decline in GFCI 12. Centres on the mainland of China have seen significant declines with Shanghai the largest faller in the index, down 31 points (following a decline of 37 points in GFCI 11). Beijing is down 18 points. Hong Kong sees a 21 point drop (following a decline of 16 points in GFCI 11). GFCI respondents believe that the Asian centres will continue to become more significant in the medium to long term. However, some respondents question whether financial centres on mainland China will be able to continue their growth without relaxations in currency controls.

• The offshore centres, having suffered significant reputational damage in the past four years, regained ground in GFCI 10 and GFCI 11. GFCI 12 shows a mixed picture with no significant moves (apart from the Bahamas which gained 22 points). Jersey and Guernsey remain the leading offshore centres.

• Progress is being shown in the Middle East with Qatar, Dubai, Abu Dhabi and Riyadh all seeing rises in both ratings and ranks in GFCI 12.

• The picture in the Americas is mixed. The main centres in the USA are down in GFCI 12 with New York, Chicago, Boston, San Francisco and Washington DC all seeing falls in the ratings. In Canada, Toronto sees a very small decline whilst Montreal, Calgary and Vancouver have all risen. In South America Sao Paulo shows the largest rise of the three centres.

• Responses for GFCI 12 were collected before the LIBOR scandal broke. Despite this, finance professionals based in London have less confidence in London’s future competitiveness than European and Asian professionals have in their home centres.

Note from Authors: The Global Financial Centres Index (GFCI) was first produced by the Z/Yen Group in March 2007 following another research project into city competitiveness we undertook in 2005. The aim of the GFCI is to examine the major financial centres globally in terms of competitiveness. The GFCI has been published every six months (although the index is actually produced every three months).

We have been able to increase the number of respondents and additional data in successive editions of GFCI and this has enabled us to highlight the changing priorities and concerns of finance professionals across a period of great economic instability.

The United Nations Broadband Commission for Digital Development has released its first-ever country-by-country snapshot of the state of broadband deployment worldwide.

The State of Broadband 2012: Achieving Digital Inclusion for All report evaluates the roll-out of broadband around the world and tracks progress towards achieving thefour advocacy targets set by the Commission in 2011 for boosting broadband affordability and uptake. It provides country rankings across up to 177 economies on economic impact, penetration, national broadband policy, and connecting people and dwellings.

The report was released at the sixth meeting of the Commission, which was held today in New York to coincide with the 67th session of the UN General Assembly. It was welcomed by UN Secretary-General Ban Ki-moon, who called broadband a “transformative technology that has the potential to spark advances across all three pillars of sustainable development: economic prosperity, social inclusion and environmental sustainability.”