Schnoor: TT must pass FATCA

She added that the Tax Information Exchange Agreements Bill currently before Parliament is simply intended to provide the mechanism to co-operate with the IRS on an obligation that already exists.

She was speaking at a FATCA breakfast seminar held by the association and the accounting firm Deloitte on Monday at the Marriot Courtyard Hotel, Audrey Jeffers Highway, Port-of-Spain. She said the association started the discussion on FATCA with the Government in 2012 and since then several stakeholders, including the local banks, the Central Bank and the Board of Inland Revenue had been working towards its implementation.

Schnoor stressed that there were critical reasons why this country must pass the agreement and bring FATCA into being. She said international business conducted from TT depended on corresponding banking relationships and most of these were with with US correspondent banks. She also said local banks were the clients of these correspondent banks which facilitate the needs of their clients, noting that all transactions which take place in US dollars worldwide must pass through the US banking system.

“If we do not become FATCA-compliant, US wire transfers, remittance services and other banking services can be restricted or, in a worstcase scenario, cancelled.” Local banks could lose their correspondent relationships and if this country were deemed to be a non-compliant jurisdiction, the banks might become subject to a 30 percent withholding tax, which would increase the cost of doing business, create a negative perception in the international community and make worse an already challenging business environment.

Schnoor said, “We have a precedent in the region for these negative consequences: Belize and Guyana are cases in point, and we should not believe it cannot happen here.” She said the association had been expressing its concern over the delay in the passage of the bill and recalled the number of media conferences held and press releases issued, adding that the association had met with both the Government and the Opposition to urge them to pass the necessary legislation.

“Our hope is that the citizenry appreciates what FATCA is and what it is not. We hope that the bill will be passed in the Parliament by the February 2017 deadline and all parties will do what is right and in the best interest of the country.” Deloitte Global Leader on FATCA and the Common Reporting Standards (CRS), Denise Hintzke led a session in which she explained the details of FATCA and what is required to comply with the law. She denied rumours being circulated that FATCA will be repealed , saying FATCA is a statute passed in the U.S Tax Code in 2010 and is a law that needs to be complied with. She said it is focused on finding U.S taxpayers who are not paying taxes or disclosing their global income to the IRS, adding that this was nothing new only the U.S. Government assuring that U.S persons are fully disclosing their income. She said failure to comply carried significant risks: apart from the withholding tax; there is the market risk to the country’s banking system of losing its corresponding banking relationships; clients of financial institutions in a non-compliant country could chose to go elsewhere because their income could be subject to the withholding tax. She said the country would also be at risk of suffering reputational risk.