Relying on good graces

The transmission of data from the local Competent Authority, the IRS to the US was expected by September 30, 2016. Since it seems that we are still trying to debate the FATCA Bill, this country is entirely reliant on the good graces of the US government to waiver adherence to the September 30 deadline and grant an extension. Are we therefore staking our financial sector on the hope that the US government allows us this extension?

Trinidad and Tobago entered into an ‘agreement in substance’ with the US since November 2014, therefore had more than ample time to become FATCA compliant. Jurisdictions with an agreement in substance must demonstrate a firm resolve to sign the Inter-Governmental Agreement (IGA) as soon as possible. On January 1, 2017, the US Treasury will begin updating their IGA list to reevaluate the progress of all jurisdictions that have failed to bring their IGAs into force. Can Trinidad and Tobago truly convince the US Government that they have done all in their power to implement FATCA? If we cannot convince stakeholders and citizens that is the case, far less the US authorities.

Trinidad and Tobago had ample time to put things in place. The media and certainly the Opposition Leader have raised the issue of the overreach of the FATCA legislation. Whilst the entire world can probably agree that FATCA legislation is a strong-armed tactic being used by the US, any attempt to address whether Trinidad and Tobago should comply with FATCA is a moot point. In fact, US FATCA is already being joined by UK FATCA and the OECD CRS. Most very large countries such the UK, Canada, France and Switzerland to name a few have implemented FATCA. Even our regional counterparts such as Barbados, Jamaica, St Kitts and St Vincent have enforced FATCA legislation. Perhaps we should have considered if we were to object to the over reach, this could only have been done if we came together as a region and did so many years ago. Why didn’t the then Prime Minister lead an initiative between November 2014 and the election in 2015 to negotiate less over reach into the personal lives of citizens of Trinidad and Tobago? Did she compromise our interest by not doing so?

Is there possible credence to the AG’s statement that the issue was one of reciprocity, one aspect of the IGA? Let us examine the following. Is consideration being given to not allowing for reciprocity and adopting a model 1B IGA? Have we considered whether the laws of the USA allow for reciprocity? A cursory review suggest that the USA cannot do this. In addition no budgetary allocation has been approved for 2016 to allow the US to transmit information.

Under the proposed FATCA legislation the Board of Inland Revenue (BIR) is expected to be the competent authority. The other issue raised by the Opposition leader Kamla Persad- Bissessa is that the Minister would have access to the information under FATCA. At present the BIR already collects personal information, and the BIR already falls under the purview of the Ministry of Finance. Perhaps the Opposition Leader needs to clarify her concern.

FATCA, although a USA law, affects everybody because of its effect on correspondent banking relationships. This means if we are not compliant you cannot issue credit cards and wire transfers etc.

When you look at the structure of the Trinidad and Tobago economy in 2014 and 2015, the energy sector would have been the single largest contributor to GDP after services, followed by the financial sector. If as expected, and based on Central Bank’s Economic Bulletin, the energy sector has contracted by over 9.1% in the first quarter of this year, the last thing we need is for the third largest contributor to GDP to take a hit at this time. What could the opposition be thinking? What was the Minister of Finance thinking or is it a case of not knowing, not understanding or worse not caring? What are our elected representatives doing?