(Trinidad Guardian) – T&T will sign an inter-governmental agreement (IGA) with the United States Internal Revenue Service (IRS) on December 31, the Central Bank has said.
In its most recent Financial Stability Report released October 16, covering up to June, the Central Bank said that this will happen as T&T and other Caribbean countries move to comply with the US’ Foreign Account Tax Compliance Act (FATCA).
FATCA, a US tax law which came into effect in January, was designed and enacted to combat offshore tax evasion by “US persons” with accounts and/or investments with both foreign financial and non-financial entities. FATCA places a requirement on foreign financial institutions (FFIs) to identify and report information on certain “US persons” invested in accounts outside of the US and for certain non-US entities to provide information about any US owners to the IRS.
A “US person” under FATCA refers to a citizen or resident of the United States of America, a US partnership or corporation. FFIs include, but are not limited to, commercial banks, non-bank financial institutions, asset managers, investment products and insurance companies where products have an investment element, the Central Bank explained.
“It is expected that FATCA may impact both financial and non-financial companies in Trinidad and Tobago that receive income from a US source, either directly in the conduct of their business, or indirectly through relationships with other financial institutions. Non-compliance carries significant implications for local financial institutions,” the Central Bank said. To comply with the FATCA requirements, T&T must resolve some issues.