Caribbean countries that have not enacted the Foreign Account Tax Compliance Act (FATCA) inter-governmental agreements (IGA’s) with the United States must do so expeditiously.
The call has come from the St. Lucia-based Caribbean Association of Banks (CAB) who said it fully supports the positions adopted by national bankers associations in their efforts to have their respective governments finalize the legislation.
In a statement, CBA said: “CAB remains concerned about the number of Caribbean countries which do not yet have IGA’s in force and therefore renews the call for Caribbean countries to enact the necessary legislation for the implementation of FATCA.”
It added; “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.”
The FATCA legislation, enacted in the United States in 2010, demands that foreign banks provide information to America’s Internal Revenue Service (IRS) on any customer deemed a “US person” if they have more than US$50,000.
The legislation is designed to crack down on tax dodgers who hide hundreds of millions of US dollars in offshore accounts annually in an effort to avoid paying taxes.
In the statement, CBA said failure to comply with the act will result in a 30 percent withholding tax on any payment of interest, dividends, rents, royalties, salaries, wages annuities, licensing fees and other income gains and profits, if such payment is from sources within the United States.
The CBA noted that as of Jan. 27, 2017 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 have all passed FATCA legislation.
Trinidad and Tobago is yet to passed the legislation because of the lack of support from the opposition United National Congress (UNC). It has since been sent to a Joint Select Committee of parliament.