Gov't moving to reach FATCA agreement

The government appears to be leaning towards having a centralised reporting system when it moves to comply with new laws aimed at catching US tax evaders using foreign accounts.

The Foreign Account Tax Compliance Act (FATCA) was passed in 2010, but the regulations guiding the law did not come into effect until yesterday.

FATCA requires financial institutions to provide information on the finances of individuals classified as US persons to the Internal Revenue Service (IRS).

A senior manager with Ernst & Young quoted a price tag of US$30 million for each local financial institution to implement the requirements of FATCA.

And bankers have appealed to the Government to push for an agreement with the US to ease the costs faced by local financial institutions if they are to conform with the FATCA.

Last night, Finance Minister Dr. Peter Phillips said now that regulations are in place, talks with the US Treasury Department can now be stepped up.
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He said the government will be seeking to enter the most beneficial agreement for local institutions.

However, Dr. Phillips would not say whether the government would be looking to take on the responsibility of providing the information to the IRS.

Local bankers have argued that an inter-governmental agreement between the Jamaican and US Governments could also significantly reduce potential for legal challenges associated with attempts to comply with the FATCA reporting and withholding requirements.

The US, the law is expected to affect about 614 firms in Jamaica when it comes into effect.

Those institutions include insurance companies, licensed securities dealers and collective investment schemes such as unit trusts and mutual funds.

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