Ex-Minister Howai weighs in on FATCA

“I always understood there was flexibility on both sides, in terms of being able to go forward. I think where we may have fallen down a bit is that some of what was taking place may not have been communicated to the banks. So they (banks) were of the view that perhaps nothing was going on when, in fact, sometimes we might be waiting on the US or the US perhaps might be waiting on us.” Howai was responding to Newsday queries about the concern expressed by major business groups and the Bankers Association of TT (BATT) earlier this year about the possible dire implications of TT missing the then September 30, 2016 deadline. Asked why there were delays under the People’s Partnership (PP) administration and what he thought might have been behind delays after the People’s National Movement (PNM) came into office, Howai said one reason may have been the time it takes for the TT Government/ US Treasury to review and respond to proposed changes by the other party.

“We (PP) had been in constant contact with the US Treasury.

In fact, there were times when we were waiting on the US Treasury to come back to us because, remember, the US Treasury itself is dealing with countries throughout the world. So sometimes we would make changes and send it back and they may take a month or two to actually come back with a change.” Howai made it clear though that he could not speak to any such communication delays under the PNM.

“I don’t know where the delays may have occurred in the last year or so; whether it was on their side or our side, but I do know that the US had always signalled and had always shown a willingness to work with us. Understanding there were issues that needed to be addressed, understanding that things needed to be done. From their perspective, there were other countries which were more important to them, some of the larger countries where the amounts (US dollar transactions) involved would’ve been much more significant than for smaller economies like TT.” Howai was speaking to reporters on the sidelines of a Scotia Wealth Management event on Wednesday evening; featuring Scotiabank’s Chief Investment Officer, Nick Chamie. The Foreign Account Tax Compliance Act, a United States (US) Federal Law which came into effect on July 1, 2014, was designed to tackle offshore tax evasion by US citizens with non-US financial accounts.

Local FATCA compliance; via the Tax Enforcement Exchange Bill 2016, would allow financial institutions in this country to inform the US’ Internal Revenue Service (IRS), via the TT Board of Inland Revenue, about accounts held by their US clients.

TT was initially given a deadline of September 30, 2015 by which to become compliant. This was extended by a year, following a request from the then newly- installed Finance Minister, Colm Imbert, who said he needed the extra time put things in place to ensure FATCA compliance.

Six weeks prior to the new deadline of September 20, 2016, Imbert and US Ambassador, John Estrada, signed a Model IA Inter-Governmental Agreement (IGA).

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 also helps to facilitate the implementation of FATCA. However, as was widely reported in the weeks leading up to September 30, 2016, the Opposition’s refusal to support passage of the Tax Enforcement Exchange Bill 2016 meant TT was not able to meet the revised deadline.