|FS: FATCA agreement negotiations ongoing|
|Written by JASON SMITH|
|Wednesday, 04 September 2013 13:57|
A proposed inter-governmental agreement with the US Internal Revenue Service would allow the VI government to share information about the bank accounts of US taxpayers. Sharing that information is a requirement of the US Foreign Accounts Tax Compliance Act, a bill that requires foreign financial firms to provide information about their US clients or face the threat of a heavy withholding tax.
According to VI Financial Secretary Neil Smith, the agreement will ease the compliance burden for firms and protect the territory’s financial services industry from a loss of reputation. The US negotiations, he added, are currently centering on the definition of the term “foreign financial institution” as it relates to VI firms.
“The only reason I would say we haven’t completed that is that we’re trying to determine the extent to which the unique BVI circumstances would require particular carve-outs in FATCA,” Mr. Smith said in a recent interview.
He added that examining and identifying those circumstances prior to the agreement’s negotiation may help facilitate VI firms’ compliance with the law.
Eventually, a similar accord will be negotiated with United Kingdom authorities, Mr. Smith said. Last year UK officials announced that they intend to introduce a tax law dubbed “Son of FATCA,” to gather information about non-resident taxpayers’ accounts.
Amidst the ongoing negotiations, the inter-governmental agreement with the US has drawn the scrutiny of VI opposition legislator Julian Fraser (R-D3). Because a significant number of Virgin Islanders and belongers have US citizenship, they are liable to pay taxes under US law.
Mr. Fraser accused Premier Dr. Orlando Smith of “overreaching” by negotiating the agreement.
“This impacts a lot of very unsuspecting persons, persons such as those who were born in the US and never lived a day there, but have amassed fortunes here in the Virgin Islands, but will now have their properties, savings accounts, and salaries voluntarily offered up to Uncle Sam by our premier to be taxed,” Mr. Fraser said in a statement.
But Dr. Smith responded by calling Mr. Fraser’s statement an attempt to “mislead” the public.
“It is not and will not be the duty of the government to collect ‘information on their citizenship and immigration status with the United States’ as alleged by the member,” Dr. Smith said. “Nobody is acting as the policeman for the United States: We are doing merely what a responsible government should do (where it can) to alleviate burden on its citizens.”