The Caribbean Association of Banks (CAB) fully supports Bankers Associations at the country level, in their efforts to have their respective governments finalize their FATCA (Foreign Account Tax Compliance Act) Inter- Governmental Agreements (IGAs) with the Government of the USA.
CAB remains concerned about the number of Caribbean countries which do not yet have IGAs in force and therefore renews the call[i] for Caribbean countries to enact the necessary legislation for the implementation of FATCA. 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.
It is important to note that, if a country does not have an IGA in force, the domestic Financial Institutions in that territory will have to establish an individual agreement with the US Government at significant cost, which may have to be passed on to their customers. Failure to comply with the Act, will result in a 30% withholding tax on any “payment of interest, dividends, rents, royalties, salaries, wages, annuities, licensing fees and other FDAP income[ii], gains and profits, if such payment is from sources within the United States. Additionally, any gross proceeds from the sale or disposition of U.S. property of a type that can produce interest or dividends and certain foreign pass-through payments”[iii] will be liable to the 30% tax withholding.
That being said, there are some countries who have the respective IGAs in force, as at 27th January, 2017[iv] for which they must be commended:
Bahamas Cayman Islands St. Lucia
Barbados Curacao St. Vincent and the Grenadines
Bermuda Jamaica Turks and Caicos
British Virgin Islands St. Kitts and Nevis
The CAB strongly encourages the remaining Caribbean countries which are not listed above, to ensure that their IGAs are in force by their extended deadlines in order to avoid the negative consequences of non-compliance with FATCA.
[i] CAB Press Release: http://www.cab-inc.com/news_publisher/news/view/the-cab-encourages-caribbean-governments-to-comply-with-fatca
[ii] FDAP Income: https://www.irs.gov/individuals/international-taxpayers/fixed-determinable-annual-periodical-fdap-income
[iii]FATCA FAQ:https://www2.deloitte.com/content/dam/Deloitte/il/Documents/financial-services/fatca_faqs_fsi_services.pdf
[iv] FATCA List of Countries: https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx
