Global compliance & reporting | The Flyingboat Tax Data Exchange
Guernsey has a high degree of expertise in software development, system integration and IT managed services.
The significant global reach of the island’s financial services sector requires this expertise to be nimble and innovative to be able to thrive in response to changing, and often complex, global conditions and requirements. It also requires effective collaboration with the local government to ensure a clear and compelling response to these requirements.
One example of an innovative and smart response is in relation to the advent of the Foreign Account Tax Compliance Act (FATCA). FATCA is a United States federal law requiring United States citizens to report their non-U.S. financial accounts. The law also requires non-US Financial Institutions to search their records for suspected US persons for reporting their assets and identities to the US Treasury.
Guernsey’s Tax Authority responded quickly to FATCA with the development of the Information Gateway Online Reporting (IGOR) portal to facilitate the collection and submission of financial information to foreign tax authorities, such as the U.S. Internal Revenue Service (IRS), based on their required messaging.
This quick response has allowed local software companies to move earlier than in most other jurisdictions and to turn a complex tax reporting requirements into a global opportunity
Fusion Systems Ltd, a local software house and systems integrator, was one such company able to benefit from the local response. The company has a 20+ year track record of providing software solutions to the finance sector with clients within fiduciary, family office and fund administration sectors. During 2014, Fusion developed a product called the Flyingboat Tax Data Exchange to assist companies in their FATCA reporting requirements. Fusion recognised the opportunity to be an early mover and to develop a unique product and to also offer a bureau service for companies with nominal reporting requirements.
Their software can not only support a requirement for business on the island, but was envisaged to support the increase and potentially more complex tax reporting requirements at a global scale. Their Flyingboat Wealth Management software provides a core platform for managing clients' wealth, with comprehensive record keeping functions for supporting compliance and risk management, and for satisfying regulatory and statutory reporting requirements.
Its early mover approach has opened up a huge number of new clients, with 70% of revenue for reporting services in 2015 being sourced from new clients, with close to 50% earned from off island.
By having a diverse and vibrant financial service sector, we can work synergistically to develop world-leading software solutions, market them locally and export throughout the world
Sales & Marketing Director, Fusion Systems Ltd
This reporting requirement will soon go beyond just the United States. The UK enacted similar reciprocal legislation for Crown Dependencies and Overseas Territories and the Common Reporting Standard (CRS) has been endorsed by OECD member countries and will require the automatic and systematic sharing of information on resident’s assets and incomes. These agreements will require a massive response and interaction between persons, financial institutions and tax authorities.
This has and will cause a headache for many financial services businesses and can have implications for how attractive it is to hold foreign accounts and investments due to potentially complex compliance and reporting requirements. However, software like Flyingboat is working to reduce the administrative cost to companies. The market for their software is global and not just tied to the local IGOR tax reporting system.
The size of this market will continue to grow as reporting requirements increase considerably in the 2016 calendar year. Reporting under CRS and UK-IGA will greatly increase the volume of reporting that the local finance industry businesses will need to do. This is something that Fusion and other local software companies are very well placed to deliver on.
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