FATCA registration to begin in November
Published:Wednesday | November 6, 2013 | 12:00 AM
Registration of local foreign financial institutions under the United States' Foreign Account Tax Compliance Act (FATCA) will start this month, but is pending Cabinet sign-off on the memorandum of understanding (MOU) outlining the terms for an inter-governmental agreement (IGA).
The IGA promises reduced costs and an easier reporting process for financial firms.
FATCA requires firms to report information on accounts with balances over US$50,000 held by 'US persons'. Its aim is to fight tax evasion.
The law requires the reporting of information to the US Internal Revenue Service (IRS), and firms which do not comply run the risk of a 30 per cent withholding charge on US-sourced income.
The IGA allows the Government to assume responsibility for reporting the data instead of individual firms, who are concerned about issues of banker-client confidentiality as well as the cost.
Bank of Jamaica general counsel Robin Sykes said the registration of financial firms required to report data under FATCA will run from November to April 25, 2014, and that reporting to the IRS commences in January 2015.
The IGAs themselves are expected to take effect in July 2014.
"This is why it is important for the MOU to be signed," Sykes said at an anti-money laundering conference in Kingston last week.
The MOU includes, but is not limited to, protocols to govern automatic exchange of information, compliance and enforcement; and specifications regarding exemptions from FATCA reporting.
Negotiation of the US-Jamaica IGA will begin once the MOU is approved by Cabinet, Sykes said.
BOJ is one of the agencies on the task force handling FATCA talks, known as the GOJ Technical Working Group (TWG). The others are Financial Services Commission, Tax Administration Jamaica (TAJ), the Attorney General's Chambers and Ministry of Foreign Affairs & Foreign Trade.
The TWG is tasked with negotiating the IGA, developing FATCA legislation, and overseeing the readiness of the 'competent authority' - a job for which the TAJ has been tapped - and executing a public education programme.
Sykes said the FATCA bill will be ready by yearend, and that the TWG anticipates its passage by January 2014.
Instructions for drafting of the legislation have already been issued and the Government has promised that it will be incorporated in the 2013-14 legislative agenda, he said.
"This overarching FATCA law will strengthen the existing legislation for various sectors as concerns issues of privacy and constitutional rights in order to protect institutions from prosecution by clients when seeking to comply with FATCA," Sykes said in a presentation delivered on behalf of BOJ senior deputy governor Myrtle Halsall.