KINGSTON, Jamaica, June 20, CMC – Jamaica’s Minister of Finance and Planning, Dr Peter Phillips, has urged local and regional financial institutions to prepare for the implementation of the United States Foreign Account Tax Compliance Act (FATCA), which has implications for these entities.
“We are still at an early stage in the implementation of FATCA. My impression is that the final regulatory arrangements are still not clear, even in the mind of the US authorities, but nevertheless, we understand the asymmetries of power and influence that exist, and I think it is important that we be prepared here,” Phillips told a seminar on FATCA in the capital, Kingston, on Tuesday.
FATCA, which was enacted in 2010 by the US government as part of provisions under the Hiring Incentives to Restore Employment (HIRE) Act, “is an important development in efforts by the US to combat tax evasion by US taxpayers with investments in offshore accounts,” the statement said.
It said the Act is of “particular significance to the financial services sector in Jamaica and elsewhere in the region, as it places an obligation on foreign or non-US financial institutions to report to the US Internal Revenue Service (IRS) information about financial accounts held by US taxpayers, including entities in which the US taxpayer holds a significant ownership interest.”
Phillips stated that his government would shortly be putting several measures in place to help institutions in Kingston prepare for FATCA’s implementation in 2013.
He said this will include the Bank of Jamaica carrying out a risk assessment on its licensees to determine the state of readiness of these entities and their systems.
“We will refer the available materials on FATCA to the Attorney-General’s Chambers for their advice as to the implications of the FATCA regime under Jamaican law,” the finance minister said.
“In particular, we will need to minimise the legal risks faced by our financial institutions,” he added.
Phillips said he is aware that US authorities are in discussion with the United Kingdom, France, Germany, Italy and Spain and other countries, with a view to entering into reciprocal bilateral arrangements with respect to the FATCA reporting regime, and that the Portia Simpson Miller administration will be exploring the possibilities of entering into such an agreement.
“If this proves possible, the financial entities will be relieved of some liabilities, particularly if reporting is done through the local central authorities who would be empowered to receive this information,” he said.
Phillips said it is not known at present what would be the liability or responsibilities of the government under any such agreement, but said they will continue to closely monitor developments and continue dialogue with US authorities.
Phillips further noted the Ministry of Finance will continue to work closely with local financial institutions, so that they will not be at a disadvantage when FATCA is implemented next year.
“Even as we make our efforts, whether on the basis of bilateral interventions with the United States, or in partnership with other Caribbean countries, we will be strenuously seeking to ensure that there is no unfair advantage faced by Jamaican financial institutions,” he said.
“But, equally, the message must be that we are facing an increasingly stringent global regime of tax compliance, and we need to put our house in order in this regard,” he added.