(Jamaica Gleaner) Prime Minister Portia Simpson Miller has cautioned regional financial institutions against taking a “knee-jerk” reaction in opposition to the implementation of the United States’ (US) Foreign Account Tax Compliance Act (FATCA).
“From our vantage point, we have to make it clear that even while recognising their motivation, we would wish for consideration to be given to the possible negative repercussions on our institutions,” Simpson Miller said.
“This is so, given the efforts which have been made to attract legal foreign-exchange inflows into our countries,” she added.
The prime minister was addressing delegates at the Caribbean Association of Bankers (CAB) 39th annual general meeting at the Montego Bay Convention Centre on Thursday.
The Internal Revenue Service (IRS)-driven FATCA that was passed into law in 2010 will begin in January 2013 and requires all non-US financial institutions to send information to the IRS about any accounts maintained by such persons, whose accounts and holdings generate income or capital gains.
Yesterday, Simpson Miller said “the US not only wishes to collect its fair share from those they define as US persons, but is also seeking to address a matter of international importance such as money laundering”.
In June, Finance Minister Dr Peter Phillips announced that the Government had sought more details from US authorities on the new law before taking a position.
In addition, Phillips had said the Jamaican Government planned to refer all available material on FATCA to the Attorney General’s Chambers for legal advice on whether it impacted Jamaican laws.
Yesterday, Myrtle Halsall, senior deputy governor of the Bank of Jamaica, who addressed the forum, said no decision has been made about how the Government would approach the FATCA issue.
She said a draft Cabinet submission has been prepared and that it is awaiting the minister’s signature.
“The Bank of Jamaica has sent out questionnaires to the banks for them to indicate their state of readiness; this information will be shared with other central banks in the region,” she said.
Conflict with law
She told the gathering that “the central banks are looking at models that are available to make a recommendation as to which one will best suit us. The attorneys general in each country is looking at the legislation to see if there is any conflict and how we will deal with this”.
Should an institution fail to comply with the FATCA regulation, it will face massive penalties on any business it does within the USA and could be banned from all such activity.
FATCA will also require institutions to determine whether their customers are subject to US tax – either by citizenship, residence, or on any other criteria.
A US person includes anyone born in the USA: anyone who has a US address, post office box, a green card or anyone who visits the USA for at least two months each year.