Following in line with the Bahamas (November 3) and Barbados (November 17), Trinidad and Tobago has made an agreement to become FATCA compliant by the end the year. The Central Bank of Trinidad said it is only a matter of time before the country becomes fully compliant with the United States’ Foreign Account Tax Compliance Act (FATCA). Enacted by the US Congress in March 2010, FACTA is designed to prevent tax evasion by US citizens using offshore banking facilities.
More & More Countries FATCA Compliant
The international tax team at LSL CPAs has the experience and expertise to help clients with international tax problems to clean up their accounts and avoid the enforcement hammer that will follow the rash of FATCA signings. As non-US financial institutions report relevant financial information to the Internal Revenue Service (IRS), accounts held by identified US citizens are being uncovered and revealed. Failure to reveal such accounts will soon result in the IRS imposing a 30% withholding tax on US-sourced income or payments to the financial institution and/or its clients. According to the IRS itself, the United States Government loses over $450 billion a year to tax evasion.
Senior representatives of the Ministry of Finance of Trinidad and Tobago are currently awaiting feedback from the IRS with respect to the adoption of the Model One Intergovernmental Agreement (IGA). Model One IGA is a standard template that facilitates FATCA reporting for a foreign country. It sets up a model for that country’s financial institutions to follow. The Central Bank’s manager of bank supervision Naveen Lalla explained the process:
FATCA Compliant In A New World
“It’s just a matter of when, not if. The Ministry of Finance has also expressed confidence that all will be in place for full compliance before the expected deadlines. A lot of work and a lot of resources have been devoted to implementation of FATCA…. US officials view tax evasion akin to money laundering and they take it very, very seriously. There will be possible loss of the relationships with the US and other foreign banks. So in the new world, FATCA compliance might just be a prerequisite to continue corresponding banking relationships.”
What is so challenging is how FATCA affects US Citizens who also are citizens of the cooperating country. Although dual citizenship used to provide a certain tax shelter, this is not the case with the implementation of FATCA. US Embassy economic officer Jake Stevens, who also spoke at a recent workshop, pointed out that FATCA only concerns US taxpayers when he said:
“It will only affect citizens of Trinidad and Tobago who are also citizens of the United States or who otherwise meet the criteria to be residents of the United States for tax purposes. It does not change the long-standing definition of who is a US taxpayer…. The only individuals who have anything to worry about are those who owe US taxes and use offshore accounts to evade those obligations.”
Is FATCA A Threat To You?
Although the international tax team at LSL CPAs agrees with the goal of building a stronger, more stable and more accountable global financial system, FATCA is still placing many people at risk. The goal of our international tax consulting services is to help clean up the any tax mess before it becomes a potential legal issue. Without questions, the Caribbean is no longer the tax refuge of old. If you need international tax help, LSL CPAs has tax solutions for you.
It is important to further note that this article presents only a partial view of the subject matter. It does not claim or attempt to be comprehensive or perfectly accurate. To learn more about how these issues might apply to your particular international accounts or financial holdings, please call LSL CPAs international tax accountant Yana Weaver at 714.672.0022.
