Bank of The Bahamas advised today that the Bank and its merchants will not be subject to a 28% Federal Income withholding tax that has begun to impact credit card transactions with businesses who did not document their non-US status to the IRS by December 31, 2012.

In early 2011, the US Government advised all US Merchant Acquiring Entities to prove the status (US or non-US) of any business with whom they settle by December 31, 2012 or face 28% US Federal Income Tax withholding in 2013. American Express has taken a very aggressive approach to this and effective January 1, 2013 began withholding taxes on all entities not designated as non-US entities.

But according to Managing Director Paul McWeeney Bank of The Bahamas and its Merchants are not subject to this approach taken by American Express for several reasons:

1. All entities that the Bank provides with Merchant Services are Bahamian owned and incorporated entities. Evidence of such is submitted to American Express upon application.
2. All Bank Accounts where American Express Transactions settle are a Bahamian Dollar Account held at the Bank of The Bahamas.
3. Due to the Bank’s current system platform, all the transactions of its American Express Merchants that are received by American Express are denominated in Bahamian Dollars.

“American Express has designated Bank of the Bahamas merchants as non-US entities. This means our clients can comfortably continue to transact business as they normally do without fear of funds being withheld. We remain the Bank of Solutions.” Mr. McWeeney said.

Bank of The Bahamas Merchant Services Products allow businesses the flexibility to accept payments from Visa, MasterCard, American Express and Diners credit, debit and prepaid cards. In addition, BOB offers E-Commerce facilities to enable online shopping. BOB rates and products are comparable to any service provider in The Bahamas and throughout the world.