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FATCA enforced in Curacao, what is it?
Published on August 8, 2016 Email To Friend    Print Version

fatca.jpg

By Josefina Josepha
Caribbean News Now Curacao correspondent

WILLEMSTAD, Curacao -- FACTA is now being enforced in Curacao as of August 3, 2016.

What is FATCA?

FATCA is the acronym for the Foreign Account Tax Compliance Act passed by the US Congress in 2010, and its function is to “detect, deter and discourage offshore tax evasion” by US citizens or residents, whilst its intent is to create a greater transparency by strengthening information reporting and compliance with respect to US accounts.

Since FATCA requires that foreign financial institutions (FFIs) in Curacao report certain information on direct and indirect US account holders to the Curacao Tax Department, which would then automatically be exchanged with the United States Internal Revenue Service (IRS).

Furthermore; FATCA imposes a 30 percent withholding tax on any “withholdable payment” made to a recalcitrant account holder or a non-compliant foreign entity.

According to the US Congress; FATCA targets US accounts, which are defined as any 'financial account' which is held by one or more specified United States persons or United States owned foreign entities.

A US Person includes among others:
• A citizen or resident of the US; and
• US partnerships or corporations.

A US owned foreign entity is a foreign entity that has one or more Substantial US Owners (more than 10% direct or indirect ownership).

Possible impact on businesses in Curacao

The possible days of tax havens are really numbered, as legislation passed by the US Congress such as FATCA make it more globally difficult for entities, whether individual or corporate, in the most fluid of economies in the free world markets to hide their income, revenue and net worth capital in FFIs or US-FFI accounts.

Therefore analyzing the sector market of educational tourism in Curacao it becomes evident that all four established medical universities, schools, faculties and a further two additional unestablished medical schools may be affected since the government does not have an educational convenience with any of the medical schools, just an economic convenience shared by an offshore banking FFI.

Speculation exists that, if the incoming government chooses a monopolistic approach to medical education tourism in Curacao, then possibly five or all six medical universities may find themselves caught between a rock and a hard place; like what happened in Bonaire or Aruba, since one of the chief obstacles that Curasalenos face with the medical schools is the apparent proposed financial and economic inconvenience for matriculating Curasalenos.

As for banks and insurance companies, the ING Bank looms as a dreadful reminder of the fact that the US Congress is more than serious about ensuring that lost tax income is dramatically minimized.
 
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