International Business Minister, Donville Inniss (right) speaking to the media during the press conference. Also pictured (from left to right) are Commissioner of Inland Revenue, Sabina Walcott-Denny; Director of International Business, Kaeron Venner; and Bank Secretary, Central Bank of Barbados, Elson Gaskin. (C. Pitt/BGIS)
By Theresa Blackman
BRIDGETOWN, Barbados (BGIS) -- The Barbados government and the United States have agreed to start negotiations with respect to an inter-governmental agreement (IGA) that will give effect in Barbados to the provisions of the Foreign Account Tax Compliance Act (FATCA), a US federal law.
And, countries refusing to comply could run the risk of causing their financial institutions to be subjected to a 30 percent withholding tax on both income and capital from US sources.
International Business Minister Donville Inniss made this announcement recently during a press conference.
He disclosed that FATCA, which was enacted in 2010 by the US Congress to target non-payment of federal taxes by US taxpayers who utilise foreign accounts for this purpose requires foreign financial institutions, which consist primarily of banks, insurance companies and custodial institutions such as investment funds to report to the US Internal Revenue Service (IRS) information about financial accounts held by US taxpayers, or by foreign companies in which US taxpayers hold a controlling interest.
“The government of Barbados established a negotiating team headed by the Central Bank of Barbados and Invest Barbados comprising both private and public sector representatives, to advise on the most efficacious way to proceed. This task force conducted research, held meetings with stakeholders and had dialogue with officials of the US Treasury Department. In the end, the task force advised Cabinet that Barbados should seek to negotiate a reciprocal IGA with the US government,” the minister disclosed.
Pointing out that Barbados is not alone in relation to FATCA, Inniss stated “to date, 16 countries have signed IGAs with the United States while several more are in negotiations to do so.”
In addition, the minister said that, from an operational standpoint, the IGA would require financial institutions in Barbados annually to collect information on US taxpayers who were account holders beginning in 2015 and transmit this information to the Inland Revenue Department of Barbados.
The Inland Revenue Department will then transmit this information to the IRS. Therefore, FATCA should have no effect on Barbadians who are living, maintaining bank accounts and working here and who are not deemed to be US taxpayers.