BVI international tax co-operation initiatives: FATCA and misconception
On 4 April 2013, the BVI government announced that it has decided to pursue a bilateral intergovernmental agreement (IGA) with the US for the implementation of the US Foreign Account Tax Compliance Act, colloquially known as FATCA. A further announcement followed, confirming BVI’s commitment to similar information sharing agreements with Britain and other western European countries.
The aspect of FATCA that has attracted the most attention in offshore jurisdictions is the requirement that foreign financial institutions (FFIs) identify and disclose US account holders or become subject to a 30 per cent withholding tax with respect to certain payments of US source income or proceeds from dispositions of property that can produce interest or dividends constituting such income. The acknowledged aim of the requirements is to increase transparency in order to detect and deter offshore tax abuses by US taxpayers and, having regard to the extraterritorial scope of FATCA and potential domestic legal impediments to compliance, the US government has promoted its implementation through IGAs with partner jurisdictions.
This article considers the nature and implications of the BVI’s commitment to FATCA and, in the process, seeks to dispel several misconceptions relating to it and other BVI tax co-operation initiatives…
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