FATCA here to stay
President Donald Trump taking up office does not mean that the Foreign Account Tax Compliance Act (FATCA) which requires US citizens living overseas to the report their assets to the Internal Revenue Service (IRS) will be repealed.
Speaking during a discussion on FATCA and the Common Reporting Standards (CRS), hosted by Deloitte, at the Courtyard by Marriott, Hastings, Christ Church, Global FATCA and CRS leader Denise Hintzke said there has been misconceptions that some of President Trump’s executive orders would impact FATCA.
“What I would say is that is not necessarily correct. All of the executive orders that he [President Trump] put out really do not have an impact on the FATCA rules that were in place already. It would take an act of congress to repeal it. So it is not something that he [President Trump] can unilaterally do. It is not expected that he will repeal it,” Hintzke said.
FATCA is an important development in US efforts to combat tax evasion by US persons holding accounts and other financial assets offshore.
Under FATCA, certain US taxpayers holding financial assets outside the United States must report those assets to the IRS which is the US government agency responsible for tax collection and tax law enforcement. There are serious penalties for not reporting these financial assets.
FATCA will also require certain foreign financial institutions to report directly to theIRS information about financial accounts held by US taxpayers or by foreign entities in which US taxpayers hold a substantial ownership interest. The reporting institutions will include not only banks, but also other financial institutions, such as investment entities, brokers, and certain insurance companies.
Hintzke also noted, that some financial institutions may be concerned that the provisions they have put in place to report financial accounts held by the US taxpayers to the IRS may have to be abandoned if FATCA is repealed.
“Sometimes it’s frustrating for a financial institution that has done all of this work to do something and then the rules were to come along and be repealed, then they would feel like they have done all of this work for nothing. However I don’t expect they will be repealed. That is not something that we are hearing discussion in the US about at all, right now,” she said.
Hintzke commended Barbados for the work it has been doing in complying with FATCA’s rules and guidelines even though it is not an easy task to be carried out.
“It is very interesting because your regulations are not in place yet, they are still in the draft form and yet you have got your portal up and you have been reporting. A lot of countries, in the absence of regulation, haven’t even submitted information yet.
“So I think Barbados is in a very good position. It’s hard because you are a small country trying to get your arms around this and trying to get out everything that is needed is difficult. So I think you have done a very good job,” she said.
Meanwhile, Ikins Clarke of Deloitte, told the media that financial institutions in Barbados have been working closely with professional firms to ensure that they are meeting IRS deadlines in issuing their reports. (AH)