BUSINESS MONDAY: NEW AGREEMENT TO BENEFIT B’DOS, USA
AN Intergovernmental Agreement (IGA) between Barbados and the United States will allow for greater co-operation under the Foreign Account Tax Compliance Act (FATCA).
This is according to Julia Tonkovich, of the United States Treasury Department.
Ms. Tonkovich stated that FATCA, which was in place since 2010, is part of the USA’s efforts to combat tax evasion by US citizens trying to withhold financial accounts and other financial assets offshore, and not paying the appropriate taxes with respect to incomes generated from those accounts.
She said that there are now 112 of those IGAs, including one with Barbados. These IGAs are government-to-government agreements to implement the requirements of FATCA.
“In some cases the agreements are reciprocal, meaning there is a two-way exchange of information on financial accounts not only from Barbados’ financial institutions, but also from the United States Internal Revenue Service (IRS) to Barbados’ tax authorities,” she said in a presentation streamed to the Lloyd Erskine Sandiford Conference Centre.
She listed several advantages of the IGAs, among them the provision of due diligence procedures for financial institutions.
“If you are in a jurisdiction like Barbados you have a Model One IGA, which means that Barbados’ banks do not have to report information to the IRS but rather to the Barbados tax authorities, who in turn exchange it with the IRS under the IGA,” she said.
The US official also stated that there is a built-in tax convention between this country and the United States, which allows for the exchange of financial information.
In addition, she addressed what information a financial institution in Barbados has to look for because of FATCA and the IGA.
According to Ms. Tonkovich, “It will be looking for financial accounts in Barbados held by USA citizens or by a foreign institution controlled by USA citizens.”
In this way, the US official said Barbados’ financial institutions will be looking for US place of birth, mailing address, post office box, and US phone numbers of US citizens, which they will have to report under the IGA.
They will also be asking when you open a new account at your bank, for self-certification that the individual is either or is not a US citizen. That information will be compared with what they have on file.
