US and Finance Ministry sign FATCA agreements

FATCA is part of US Federal Law which targets Americans living within and outside the US to report on their Non-United States financial accounts. Imbert and US Ambassador to Trinidad and Tobago (TT), John Estrada, signed a Model IA Inter-Governmental Agreement (IGA) at the Finance Ministry, Eric Williams Financial Complex, Independence Square, Port-of-Spain shortly before 10 am.

The objective of this IGA is to improve international tax compliance through mutual assistance in tax matters based on an effective infrastructure for the automatic exchange of information. The IGA will also facilitate the implementation of FATCA, which was enacted in the US in 2010.

This was surely great news for the Bankers Association of Trinidad and Tobago (BATT), whose members held a joint press conference in late June to warn of the negative consequences of failure to become FATCA compliant.

This included the imposition of a 30 percent withholding tax on US dollars flowing into the TT banking system from the US.

The Finance Ministry yesterday described the IGA signing as “another milestone in the relationship between both countries on tax matters and brings to an end approximately three years of negotiations occurring between the two countries on the Agreement.” The ministry added that the signing is also timely as it was completed before September 30th, 2016, the deadline set for the exchanging of information between TT and the US.

TT and the US will now move to bring the IGA into force. This would allow for the automatic exchange of information between both countries and also ensure that foreign financial institutions, including local banks and insurance companies, will not be subjected to a thirty percent withholding tax.

“To bring the IGA into force, [Imbert] will take to the Parliament the necessary legislation, among other things, to provide for the automatic exchange of information by the Board of Inland Revenue to the United States Inland Revenue Service,” the ministry stated.

Foreign and CARICOM Affairs Minister, Dennis Moses, was present for the IGA signing yesterday morning.