Local investment and financial firms expecting the new United States president Donald Trump to reverse the Foreign Account Tax Compliant Act (FATCA) can forget it.
Deloitte’s Global FATCA leader on its foreign account tax compliance initiative Denise Hintzke dismissed speculation that Trump would repeal the law, which promotes cross border tax compliance by implementing an international standard for the automatic exchange of information related to US taxpayers.
The law, enacted in 2010 by the US congress and operationalized by Barbados two years ago, requires foreign financial institutions to report to the US Internal Revenue Service on financial accounts held by American taxpayers, or by foreign companies in which US taxpayers hold a controlling interest.
Hintzke said in light of some of the changes Trump has been making to US laws there were “all kinds of rumours” in the region regarding the future of FACTA.
She explained that the freeze the president placed on regulations on the day of his inauguration did not apply to the tax compliance regulation.
“I just want to tell you that is not something that he can technically do. This is a statutory law. It would take an act of congress to actually repeal it. He cannot do that by executive order. So any of those rumours about it being repealed or him doing something that has eliminated these rules is not correct because that is not something he can do by executive order,” Hintzke told a Deloitte breakfast meeting at the Courtyard by Marriott this morning to bring industry officials up to date on FATCA, as well as the Common Reporting Standard (CRS), a similar yearly automatic exchange of financial information system introduced in 2015 by the Organization for Economic Cooperation and Development.
However, she did not rule out a repeal altogether, saying it could happen “at some point in time” due to the increasing discussion on revamping the US tax code.
“As part of that there is always the potential that FATCA would either be something that they give up in terms for giving something else or it could also be something that they decide it is no longer necessary, but I don’t’ expect that to be the case. It is just that that potential chance is always out there.”
She said revocation of the regulation would be frustrating for financial institutions and countries that had put all the necessary time, energy and measures in place in order to comply with it.
Hintzke told Barbados TODAY Barbados continued to be complaint with both FATCA and the CRS.
“A lot of countries, in the absence of regulations, haven’t even submitted information yet. So I think Barbados is in a very good position . . . You are a small country and trying to get your arms around this and get out everything that is needed for the industry, so I think you have been doing a very good job,” she said.
Barbados has signed an inter-government agreement with the US to facilitate implementation and enforcement of the FATCA rules through the Barbados Revenue Authority (BRA).
Since last year’s FATCA reporting BRA has been working on upgrading its tax system, which is expected to be back up by the end of July, weeks before the next reporting is due.