Turks and Caicos Islands (TCI) is ready to comply with a major international tax transparency agreement from today, Thursday, 15 May 2014.
The TCI now joins other UK overseas territories, such as the Cayman Islands and the British Virgin Islands, in practically demonstrating that the territories are not tax havens, but are, rather, open, transparent and well governed.
TCI Financial Institutions must soon register with the United States Internal Revenue Service (IRS) as Foreign Financial Institutions (FFI) and obtain a Global Intermediary Identification Number under a Model 1 IGA, announced Henry Saunders, Director of the Exchange of Information Unit of the Ministry of Finance in Grand Turk. The UK IGA was signed in November 2013, and the US IGA with the TCI is now ready to be signed.
The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 by the United States’ Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. It requires foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
There are two versions of the USA model agreement – a reciprocal version and a non-reciprocal version. Both versions establish a framework for reporting by financial institutions of certain account information to their respective tax authorities, followed by automatic exchange of such information. Both versions of the model agreement also address the legal issues that had been raised in connection with FATCA, and simplify its implementation for financial institutions.
Islands’ Attorney General, Hon Rhondalee Braithwaite-Knowles said:
Tax transparency is perhaps the hottest topic for conversation and implementation in the global financial sector,” said “Having met the initial standard we will work on regulations to ensure compliance through an effective legal framework.
Acting Governor Hon Anya Williams added:
Combating tax evasion in the offshore financial services industry is a major international issue, in which the UK and its Overseas Territories have taken a leading role. In an effort to prevent the loss of tax revenues, countries have agreed to share tax information with their treaty partners governed by a standard that protects the rights and safeguards of tax payers and the reporting agents. We are committed to these standards in the Turks and Caicos.” said.
In a related move, the TCI Government has extended its deadline for submissions to its consultation on beneficial ownership information to 30 June, 2014. Interested parties are encouraged to contribute to this important exercise, the outcome of which will have an impact on the future of the financial services industry in TCI.