T&T to be FATCA compliant soon
The Central Bank says it is only a matter of time before this country becomes fully compliant with the United States’ Foreign Account Tax Compliance Act (FATCA), which was enacted by the US Congress in March 2010.
FACTA is a US law designed to prevent tax evasion by US citizens using offshore banking facilities.
Under the act, non-US financial institutions are required to report relevant information to the US tax authority, the Internal Revenue Service (IRS), about financial accounts held by identified US persons.
Failure to do so could result in the IRS imposing a 30 per cent withholding tax on US-sourced income or payments to the financial institution or its clients.
According to the IRS itself, the US loses US$450 billion a year to tax evasion.
Central Bank’s manager bank supervision Naveen Lalla said yesterday that the bank has been advised by senior representatives of the Ministry of Finance that this country is currently awaiting feedback from the IRS with respect to the adoption of the Model One Intergovernmental Agreement (IGA).
Model One IGA is a standard template that facilitates FATCA reporting.
“Trinidad and Tobago has submitted all pertinent documents to the IRS and the (US) Treasury Department and are currently awaiting feedback from them. It’s just a matter of when, not if. The Ministry of Finance has also expressed confidence that all will be in place for full compliance before the expected deadlines. A lot of work and a lot of resources have been devoted to implementation of FATCA,” he said.
Lalla was speaking during a FATCA workshop hosted by the American Chamber of Commerce of Trinidad and Tobago (Amcham) at Hyatt Regency in Port of Spain.
Under FATCA, financial institutions will be required to comply with a number of obligations from July 1, 2015.
Lalla said if this country does not comply there will be a perception by the US government that Trinidad and Tobago is a non-cooperating country aiding US persons to evade taxes.
“My discussions with US officials is that they view tax evasion akin to money laundering and they take it very, very seriously. There will be possible loss of the relationships with the US and other foreign banks. So in the new world, FATCA compliance might just be a prerequisite to continue corresponding banking relationships,” he noted.
US Embassy economic officer Jake Stevens, who also spoke at yesterday’s workshop, pointed out that FATCA does not change tax obligations and only concerns US taxpayers.
“So it will only affect citizens of Trinidad and Tobago who are also citizens of the United States or who otherwise meet the criteria to be residents of the United States for tax purposes. It does not change the long-standing definition of who is a US taxpayer, and it does not change the tax obligations that US taxpayers are subject to,” he said.
Stevens further explained: “All it does is add a reporting requirement to foreign financial institutions in order to combat tax evasion. The only individuals who have anything to worry about are those who owe US taxes and use offshore accounts to evade those obligations.”
He said by working together to detect, deter and discourage offshore tax abuses through increased transparency and enhanced reporting, countries can help to build a stronger, more stable and more accountable global financial system. “While Trinidad and Tobago does not yet have a FATCA agreement with the United States, we understand it is currently in discussions,” he said.
