Nov 2014 Financial News

AMCHAM calms FATCA fears

Nov 21, 2014

THE Foreign Account Tax Compliance Act (FATCA) does not change tax obligations and it only concerns United States (US) taxpayers, according to Jacob Stevens, economic officer at the United States Embassy in Port-of-Spain.

He made the comment on Wednesday at the start of a breakfast workshop on FATCA hosted by the American Chamber of Commerce of Trinidad and Tobago (AMCHAM) at the Hyatt Regency Trinidad. He added FATCA will only affect nationals who are also US citizens or who otherwise meet the criteria to be US residents 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. 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 added that information exchange is a top priority for the US because access to information from other countries is critically important to the full and fair enforcement of US tax laws. “Our tax collection agency, the IRS, has been a leader in the development of new international standards for greater transparency through full exchange of tax information. But we cannot do this alone. By working together to detect, deter and discourage offshore tax abuses through increased transparency and enhanced reporting, we can help to build a stronger, more stable and more accountable global financial system.”

He said FATCA is quickly becoming the global standard for automatic information exchange and more than 100 jurisdictions and tens of thousands of financial institutions have sought bilateral agreements with the US related to the law, adding he expected the numbers to grow.

He said the US Department of Treasury has developed intergovernmental agreements or IGAs which require all relevant foreign financial institutions in a jurisdiction to report information about offshore US accounts held by US taxpayers. He added these reporting requirements are similar to what is already required of US financial institutions and are essential to help the IRS catch tax evaders. Stevens said this country does not yet have a FATCA agreement with the US but he understood discussions are underway to secure one. However, he said foreign financial institutions are still able to register directly with the IRS and comply with their obligations under FATCA, avoiding FATCA-related withholding of their US sourced income or earnings. In order to minimise the administrative burdens of the legislation, he said foreign financial institutions were allowed to rely on information they already must collect for local anti-money laundering and know-your-customer rules. “Also, US persons owning these foreign accounts or other specified financial assets must report them to the IRS when filing their US tax returns. Just as they were required to do before FATCA became law.”

President of the American Chamber of Commerce, Hugh Howard, said discussions on FATCA have been on-going in Trinidad and Tobago for some time and is creating some discomfort and anxiety among segments of the population as the tax compliance regime unfolds.

He said this is partly due to a perceived lack of access to information or discussion surrounding the roll out and impact of the legislation. He added,“the reality is that while information is available, the complexity of the subject matter poses challenges of interpretation and implementation to most people.”

Howard said it was because of the complexity of the issue and the fact that some of the deadlines for compliance had either expired or were close to expiry that AMCHAM had decided to organise the workshop.

Source:
By Verne Burnett
Newsday
Friday November 21 2014

http://www.newsday.co.tt/business/0,203235.html