Business
The new US Tax rules and their impact on the Caribbean
As a region, the Caribbean is inextricably linked to the United States.
Economically, the biggest industry by any measure is tourism and the biggest source market for the region’s tourism product remains the United States. For so many reasons, it makes sense that the region pays attention to U.S. politics and these days, the discussion needs to be about the changes in US tax regulations.
The United States however, is the only country that taxes its citizens / residents on their worldwide income even when they are not resident in the US. So aside from being obliged to file tax returns even when living overseas, the Bank Secrecy Act has led to the need for Americans to declare overseas bank and financial accounts over a certain level (known as FBAR regulations) or pay particularly high penalties for failing to do so.
Regional financial institutions will be required to report depositors / investors they believe to be Americans to the Internal Revenue Service (IRS) – under something called the Foreign Account Tax Compliance Act (FATCA). The incentive for these Foreign Financial Institutions (FFIs) to comply, would be to avoid withholding penalties imposed on their US assets.