The US Foreign Account Tax Compliance Act (FACTA), aimed mainly at US citizens involved in tax evasion, will also be a real challenge of persons and businesses in Anguilla with connections to US nationals and companies.
This was indicated at a recent meeting at Caribbean Juris Chambers at which its CEO, Mr John Benjamin, QC, invited Mr Perin Bradley, of the Ministry of Finance, to address staff members and other persons in the business community who have certain concerns about FACTA.
Mr Bradley is the Compliance Manager for FACTA, working on behalf of the Anguilla Government. He and members of his team have been addressing the FACTA issue on various occasions to enlighten the public about the requirements of the US legislation. For its part, the Anguilla Government plans, through the House of Assembly, to pass the Foreign Account Tax Compliance (USA) (Implementation and Inter-Governmental Agreement) Bill 2014, giving effect to FACTA in Anguilla. Under the legislation, Anguillian institutions will be required to share financial information with the IRS in the USA through Anguilla’s Inland Revenue Department.
“Under the US tax law, if you have ten percent (up to US$50,000) or more in a company [in Anguilla], then you are considered a substantial owner,” Mr Bradley told the attendees at the meeting on Friday, July 11. “Under those circumstances, the company will certainly come under FACTA.”
Mr Bradley, who spoke about the combined efforts of himself and other task force groups, stressed: “We are all working collaboratively to try to figure out how to minimise the impact of FACTA on us. But it is going to be a problem – a real challenge – for us to grapple with. The cost of business certainly will go up because for most business institutions, you have to have a FACTA reporting officer…”
He went on: “FACTA was supposed to come into effect on July 1. I think the US Government realised that it will be impossible to get all the countries signed up by then. So they agreed that once you make a good faith effort to implement FACTA, they will treat the next two years as a transitional period; and so it is going to be a light touch approach to FACTA implementation. But, theoretically, we have about two years to figure out how we are going to get this FACTA thing work.
“Come January 2015, they are going to be expecting the banks to start reporting information to the US authorities. That key part is for the banks and the customers especially the ones who…have some nexus to the US. Those are the ones who need to pay particular attention to what the situation is, and what they have been doing for the past few years in terms of meeting their obligations under the US law.
“Now, the US Government also has what is called the Overseas Monetary Disclosure Programme. If you haven’t been straight over a period of time, they will tell you come clean, pay a flat fee and then go forward in good standing. This has proven to be quite successful over the last few years, but the trouble with that is there is no guarantee that they won’t look back further…, so a lot of people are very hesitant to use that programme. However, as far as the US Government is concerned, it has made a significance difference for them.”
In order to avoid any doubt or unforeseen difficulty in relation to obligations to FACTA, Mr Bradley gave this timely advice to all persons concerned: “Try to understand what your nexus/connection to the US is; your spouse’s connection; your children’s connection and your business. Try to get a good understanding of what the situation is.”
Mr Bradley observed that some Anguillian children were born in US territories, and were holders of US passports, while other persons have permanent visas or passports and are US citizens – all of whom would fall under FACTA’s requirements relating to business involvement in Anguilla and the payment of tax.
He disclosed that preliminary arrangements were being made to hold a workshop, at a date to be announced, for members of the financial industry in the first instance. That event will be aimed at acquiring and circulating all the necessary information about FACTA as well as to enable the industry to address the concerns of members of the general public.
The services of Mr Claudel Romney, of BDO LLC Anguilla, will be engaged to facilitate the workshop during which two FACTA officials are expected to be in attendance.
