Caribbean Association Of Banks Urges Compliance With FATCA
The Caribbean Association of Banks (CAB) has expressed concern about the number of countries in the region which have not yet put in place inter-governmental agreements (IGAs) with the United States on the Foreign Account Tax Compliance Act (FATCA).
It said it was therefore renewing the call for Caribbean countries to enact the necessary legislation for the implementation of FATCA.
“Failure to do so has far-reaching implications for banks in terms of an increase in sovereign risk and its impact on their ability to conduct business,” CAB said in a release.
It pointed out that if a country does not have an IGA in force, domestic financial institutions in that territory will have to establish individual agreements with the US government at significant costs, which may have to be passed on to their customers.
Failure to comply with the Act will result in a 30 per cent withholding tax on any payment of interest, dividends, rents, royalties, salaries, wages, annuities, licencing fees and other income, gains and profits, if such payment is from sources within the United States.
In addition, any gross proceeds from the sale or disposition of US property of a type that can produce interest or dividends and certain foreign pass-through payments will be liable to the 30 per cent withholding tax.
CAB said that among countries in the region which have IGAs in force as at January 27, 2017 are The Bahamas, Cayman Islands, St. Lucia, Barbados, Curacao St. Vincent and the Grenadines, Bermuda, Jamaica, Turks and Caicos Islands, British Virgin Islands and St. Kitts and Nevis.
“The CAB strongly encourages the remaining Caribbean countries to ensure that their IGAs are in force by their extended deadlines in order to avoid the negative consequences of non-compliance with FATCA,” the release said.
The CAB is a community of banks and other financial institutions in the Caribbean which proactively influences issues impacting the financial services sector through advocacy, education and networking.
It represents 73 banks and other financial institutions with an asset base of more than US$31 billion as at December 31, 2014.