FATCA takes effect September 30 for Jamaica
Tax Administration Jamaica (TAJ) is finalising preparations for the automatic exchange of information under the United States Foreign Account Tax Compliance Act (FATCA), which is to take effect in two months.
Based on the FATCA legislation, financial institutions will be required to submit reports for calendar year 2014 to the local tax authorities by August 31, 2015, to facilitate the first transmission of data to the Internal Revenue Service (IRS) by September 30, TAJ said.
TAJ is the designated central authority to which financial houses will transmit FATCA reports, and which, in turn, will report the data to the IRS.
The US passed FATCA in 2010, requiring all foreign financial institutions to identify and report on customers who are "specified US persons", whether or not they are the primary account holders, as well as "recalcitrant customers".
TAJ said that, so far, 49 of 61 financial institutions have registered on its tax portal and some have been participating in a test phase which runs until today, Friday, August 7, to accommodate necessary adjustments.
In recent weeks, TAJ said it has been working with financial institutions - which will be required to upload the reports - to register and submit test data to assess the readiness of the system.
The FATCA submission process is facilitated through the TAJ's new revenue administration information system, which is accessible through its web portal.
TAJ said the system employs industry-standard security practices at the database and communication layers.
The tax authorities said that since May 2014 when the Jamaican and US authorities signed a reciprocal intergovernmental agreement (IGA) for local financial institutions to transmit the required information to the minister of finance or his delegate - the TAJ - it has, in collaboration with other government partners, had several sensitisation sessions and workshops to prepare stakeholders for the introduction of FATCA.
It has held discussions with entities such as the Jamaica Bankers Association, the Joint Co-operative Credit Union League, the Jamaica Association of Insurance and Financial Advisers, compliance and information technology officers of major financial institutions, the management of financial institutions and the Jamaica Institute of Financial Services.
Information to be reported to the TAJ includes the name, address, and US tax identification number of each specified US person/ recalcitrant customer; account number; account balance/value at the end of the calendar year, or immediately before closure if the account was closed during the calendar year; gross interest/ dividends, and interest and other income credited to the account.
The IGA requires Jamaica, based on FATCA, to tell the US tax authorities of US citizens and residents, including green card holders, who have accounts of US$50,000 or more in Jamaican financial institutions.
According to the IGA, the tax compliance arrangement will "enter into force on the date of Jamaica's written notification to the United States that Jamaica has completed its necessary internal procedures for entry into force of this agreement."
However, the IGA stipulates that it shall terminate on September 30, 2015 if Article 2 relating to the exchange of information is not in effect for either Jamaica or the US by that date.