The US gave The Bahamas provisional QJ status in 2000, but made an extension to the full six years conditional on the Bahamas signing a TIEA with the US before the provisional period expired. This led to extensive negotiations during 2001, which ended in the TIEA being signed in January 2002.
The TIEA will not, however, be retroactive and will only apply on criminal matters from January 1, 2004. Civil tax matters will be covered by the TIEA from January 1, 2006.
According to the US Treasury, once the Agreement is effective with respect to requests for information made in connection with civil tax matters, it will be consistent with the standards for an exchange of information agreement described in the Internal Revenue Code.
The Code generally allows US taxpayers to claim a tax deduction for expenses associated with a convention held in certain beneficiary countries with tax information exchange agreements with the United States to the same extent as a convention held in the United States.
Thus, beginning on January 1, 2006, The Bahamas will be considered part of the ﾓNorth American areaﾔ for purposes of determining whether US taxpayers may deduct expenses incurred in attending conventions, business meetings and seminars in The Bahamas.
By Mike Godfrey, Tax-News.com
