Barbados working towards FATCA compliance

The Barbados Central Bank has revealed that a Working Group to negotiate an inter-governmental agreement (IGA) with the United States within the next six months to facilitate compliance with the Foreign Account Tax Compliance Act (FATCA) has been created.

The Central Bank further disclosed that it was engaged with the country’s promotional agency – Invest Barbados, to formulate a response to the FATCA regulation, with input from the financial services industry (in Barbados), and the country’s policymakers.

The Central Bank of Barbados said that in order to meet the January 1, 2014 deadline, the country needed to adopt a proactive approach in recognition “that the growth and continuation of its vibrant international business sector depends on its compliance with this American initiative.”

“To this end, a working group under the joint leadership of Invest Barbados and the Central Bank of Barbados and comprising representatives from the Ministry of International Business, the Inland Revenue Department, the Barbados International Business Association, the Institute of Chartered Accountants of Barbados and the Barbados Bankers Association, has been established to keep abreast of the FATCA developments and to make recommendations to the Government of Barbados on its response,” it said, reporting that these representatives had met twice last month.

FATCA was enacted by the United States Congress in March 2010 and is intended to ensure that the U.S. tax authorities obtain information on financial accounts held by American taxpayers, or by foreign entities in which American taxpayers hold a substantial ownership interest, with foreign financial institutions. Failure by a foreign financial institutions to disclose information would result in a requirement to withhold 30 percent tax on US-source income.

Several countries have been invited to enter into an inter-governmental agreement with the United States on a bilateral basis, to ease the compliance burden on local financial institutions by allowing them to report data directly to the tax authority in the country in which they are based, rather than to the American Internal Revenue Service.

Source: Tax-News.com| Global Tax News