Trinidad and Tobago and the United States sign new agreement to exchange of information under FATCA

Last week Trinidad and Tobago and the United States signed an agreement to facilitate automatic exchange of information under the US Foreign Account Tax Compliance Act (FATCA).

FATCA, enacted by the US Congress in 2010, is intended to ensure that the US obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.

The signing of the agreement brings to an end approximately three years of negotiations between the US and Trinidad and Tobago. It was completed before the September 30 deadline set for the exchange of information between both countries.

The US has signed IGAs with more than 120 jurisdictions and is engaged in related discussions with many other nations. America had enacted FATCA in 2010 to obtain information on accounts held by US taxpayers in other countries. It requires US financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on US account holders. As per the IGA, FFIs in Trinidad and Tobago will be required to report tax information about US account holders directly to the Trinidad and Tobago government which will, in turn, relay that information to the IRS.

To bring the agreement into force, Trinidad and Tobago’s Parliament must now pass the necessary legislation to enable the Board of Inland Revenue to pass data on to the US Internal Revenue Service.

While new criminal prosecutions in the US start and continue against US tax evaders, our law firm expects unabated aggressive enforcement of the U.S. tax laws, including increased criminal prosecutions and civil investigations. We have been advising our clients to expect the unexpected (and the worst) in their tax treatment and disclosure of offshore assets.

Patel Law Offices has consulted with hundreds of clients regarding their offshore asset compliance issues. Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems. Our firm assists (and defends) clients and their advisors to legally disclose (and legitimize) foreign accounts.