Question

What is FATCA?


What is the FATCA compliance act? What does FATCA stand for, what does it state and how does it affect Trinidad?
Post your Answer
Answers
Thanks 0
Votes 0
LindaG answered
Mon, 12th December 2016 at 4:59PM
FATCA- Foreign Account Tax Compliance Act

FATCA requires foreign financial institutions to report directly to the U.S. Internal Revenue Service (IRS) all clients who are U.S. citizens, green card holders living in the U.S. or abroad, or who are foreign entities in which U.S. taxpayers hold a substantial own.

The aim of FATCA is to target those who evade paying U.S. taxes by hiding assets in undisclosed foreign bank accounts.

How Does It Affect Trinidad-
Our Double Taxation Treaty with the United States was signed in 1971. We also have a Tax Information Exchange Agreement (TIEA) with the United States.
This should make it relatively easier to enter into Intergovernmental Agreements of the model types proposed by the United States, in which foreign financial institutions report information to authorities in their residence country and have those foreign authorities report the information to the IRS.

It eliminates U.S. withholding on payments to our financial institutions; it identifies specific categories of our financial institutions which are deemed compliant or which present a low risk of tax evasion; it relieves our financial institutions from terminating the account of a recalcitrant account holder; and it imposes pass through withholding on payments to other foreign financial institutions in the FATCA treaty partner or in another jurisdiction with which the U.S. has a FATCA agreement.

the 2 Canadian and 3 US owned banks are very much FATCA ready however much work is needed in bringing the Credit Unions, Unit Trust Corporation and other sectors including the Board of Inland Revenue , Ministry of Foreign Affairs and other related sectors to be onboard and have the resources and man power to properly manage this FATCA agreement should it come to pass.
1%