A number of Caribbean trade bloc nations have announced plans to begin talks with US financial officials in the coming months to negotiate an agreement with the US discouraging American citizens and residents from hiding millions of tax free dollars in accounts overseas.
Guyana’s government this week became the latest to announce plans to begin talks with the Internal Revenue Service (IRS) allowing banks and other financial institutions to comply with the Foreign Account Tax Compliance Act (FACTA) that is set to come into force in the US later this year.
Actual reporting by financial agencies in the region, commercial banks in particular, is set to begin in 2015. Stiff penalties await both commercial agencies and individuals who fail to comply with the highly punitive act that was approved by Congress in 2010 purportedly to catch the growing legion of American tax evaders.
Individual countries are required to sign bilateral agreements with the US.
Among those signaling plans to commence talks leading to a FACTA compliant agreement are Barbados, the Bahamas, and Trinidad. Guyana which hosts the headquarters of the 15-nation regional grouping announced through Finance Minister Ashni Singh “our willingness to commence negotiations” with the Americans for an agreement. Its own revenue authority will be the lead agency.
The act levies a whooping 30 percent withholding tax on payments of money sourced in the US to foreign financial institutions unless they have a bilateral agreement with the IRS.
Recently, Barbadian authorities said they were ready to talk bilateral on an agreement as, like other neighboring island nations, its offshore financial sector is a major economic player in its economy.
“The government of Barbados established a negotiating team headed by the central bank of Barbados and Invest Barbados comprising both private and public sector representatives, to advise on the most efficacious way to proceed. This task force conducted research, held meetings with stakeholders and had dialogue with officials of the US Treasury Department. In the end, the task force advised cabinet that Barbados should seek to negotiate a reciprocal agreement with the US government,” said International Business Minister Donville Inniss.
Inniss said that the agreement will compel Barbados to annually collect financial information on Americans with accounts and assets on the island and on-send such information to the INS beginning next year and each year after.
More than two dozen countries including the UK have negotiated bilateral agreements with the US in this area.