Barbados to begin FATCA negotiations

Barbados International Business Minister, Donville Inniss recently announced that the Freundel Stuart administration and the United States have agreed to start negotiations with respect to an Inter-Governmental Agreement (IGA) that will give effect in Barbados to the provisions of the Foreign Account Tax Compliance Act (FATCA).

FATCA, enacted by the US Congress in 2010 and taking effect on July 1, 2014, is intended to ensure that the U.S. obtains information on accounts held abroad at foreign financial institutions (FFIs) by U.S. citizens. Failure by an FFI to disclose information on their U.S. clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30 percent tax on payments of U.S.-sourced income.

“The Government of Barbados established a Negotiating Team headed by the Central Bank of Barbados and Invest Barbados comprising both private and public sector representatives, to advise on the most efficacious way to proceed. This Task Force conducted research, held meetings with stakeholders and had dialogue with officials of the US Treasury Department. In the end the Task Force advised Cabinet that Barbados should seek to negotiate a reciprocal inter-governmental agreement with the US Government,” the Minister disclosed.

Pointing out that Barbados is not alone in relation to FATCA, Inniss stated: “To date, 16 countries have signed inter-governmental agreements with the United States while several more are in negotiations to do so.”

The Minister said that the inter-governmental agreement would require financial institutions in Barbados to annually collect information on U.S. tax payers holding accounts on the island-nation beginning in 2015 and transmit this information to the Inland Revenue Department of Barbados.

The Inland Revenue Department will then transmit this information to the United States internal revenue service (IRS). Therefore, FATCA should have no effect on Barbadians who are living, maintaining bank accounts and working in the country and who are not deemed to be US taxpayers.

Source: Tax-News