FATCA will have implications for all customers as the
“Know Your Customer” processes and requirements will
become even more administrative and time consuming as
financial institutions seek to identify US persons and non‑US
persons. As already indicated the incentives are high for
local financial institutions to cooperate with the US IRS and
comply with FATCA as many of them possess US assets and
earn US source income for their own company portfolios.
Therefore they will not want to subject their income to a 30%
withholding tax which will further diminish returns in an
already low yielding global market.
Across the CARICOM region, all countries and Governments
have begun work on becoming compliant with FATCA and
they have drafted legislation to that effect. Thus far, Trinidad
and Tobago, Jamaica, Guyana, the eight countries of the
Eastern Caribbean, and Haiti have agreed to the signing of an
While the IRS has granted a six-month extension on FATCA,
that is all FFIs will have to begin compliance by July 1 2014
instead of January 1 2014, there is still very little time and
much to do in the CARICOM region to be ready. The biggest
challenge will be education of the investing public and getting
US persons in particular to understand the new requirements
of opening accounts with FFIs.
There is a tremendous work program that has begun globally
for FATCA and customers can expect to hear more about
FATCA in 2014 as the different stakeholders work together to
achieve the ultimate objective of FATCA which is to prevent
and discourage tax evasion globally. However we encourage
the investing public to learn more about FATCA and to
look out for public awareness campaigns and marketing
material so that you, the investor will better understand the
consequences.
While the IRS has granted a six-month extension on FATCA, that is all
FFIs will have to begin compliance by July 1 2014 instead of January
1 2014, there is still very little time and much to do in the CARICOM
region to be ready.
IGA Model 1 Agreement with the IRS. Belize, Barbados and
Bahamas are also favoring a Model 1 Agreement.
Most of the CARICOM Governments have suggested their
local tax authorities to be the Competent Authority, the
body that will enforce FATCA within the country, ensure the
FFIs are in compliance and liaise and report to the IRS on
an ongoing basis. However, there is a lot of work needed in
most of the CARICOM countries to restructure the existing
framework and processes of the Competent Authority to
ensure that they are ready to accept the major responsibilities
that FATCA will bring. It is essential to the international
markets especially the United States, that the FATCA
partner countries who have signed a Model 1 IGA have the
established Competent Authority fulfill its duties efficiently in
order to protect foreign investment into those countries and
subsequently, their international reputation.
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Caribbean Investment iQ December 2013