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FATCA Notice
FATCA Signing: US & St. Lucia
India, U.S. Sign Tax Information Agreement for FATCA
 

 

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) was enacted by the United States (US), in 2010 and compels foreign financial institutions (FFIs) and non financial entities (NFEs) to report on accounts and assets held by US citizens and held by foreign entities in which US citizens hold controlling interests. This legislation ultimately aims to stop tax evasion and to improve income tax compliance. 

 
 

Saint Lucia & FATCA

Saint Lucia signed a 1A reciprocal Intergovernmental Agreement (IGA) with the US on 19th November 2015. Under this agreement both countries will share information for tax purposes. The Inland Revenue Department (IRD) will collect information and report on qualifying accounts held by US account holders within this jurisdiction and vice versa. Saint Lucia is slated to report for income years 2014 and 2015 by 30th September 2016.

The diagram below shows the flow of information for FATCA. The revenue agencies in both countries collect and share relevant financial account information, obtained from financial institutions.

FATCA Information Flow

 FATCA info Flow


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Who Will Be Affected by FATCA?

 

Financial Institutions and Non Financial Entities

The FACTA provides for automatic withholding tax of thirty percent (30%) of all payments due, from US source income, including the gross proceeds of certain sales. to non-compliant FFIs and NFEs.

Such payments include:

 

  • Interest (including IOD)
  • Dividends
  • Annuities
  • Profits and Income
  • Salaries and wages
  • Compensation
  • Remuneration
  • Rents
  • Premiums
  • Emoluments
  • Sale or disposition of property that can produce dividends and interest.
  • Sale of stock (on gross proceeds even when there is no gain)
  • Any other fixed or periodical gains, profit or income which stems from sources within the US.

 

To avoid this automatic withholding penalty, FFIs and NFEs can sign up with the IRS to provide information on applicable financial accounts with US Indicia. When financial institutions decide to become partners they are expected to:

 

  • Collect relevant information on all accounts holders ( to determine which are owned by US citizens)
  • Comply with verification and due diligence procedures
  • Report on US account holders
  • Comply with reporting requests

 

Some categories of FFIs are exempted from FATCA requirements. These include:

 

  • Most Government entities
  • Most non-profit organisations
  • Certain small, local financial firms
  • Certain retirement entities

 

FATCA Reporting Times
FATCA reporting in Saint Lucia will commence in 2016. The Table below shows the reporting times and the information that needs to be provided for the next three (3) years and onwards.

 

 

 

2016

 

When  to Report

September 30 2016

FFIs in Saint Lucia

What  to Report (with respect to 2014 and 2015):

1.

Account holder’s name

 

For passive non-financial foreign entity, the name(s) of any substantial U.S. owners

2.

Account holder’s U.S. taxpayer identification number (TIN)

 

For passive non-financial foreign entity, only the TIN(s) of any substantial U.S. owner(s)

3.

Account holder’s address

 

For passive non-financial foreign entity, only the address(es) of substantial U.S. owner(s)

4.

Account number

5.

Account balance or value

6.

For accounts held by recalcitrant/nonconsenting account holders: report aggregate number and balance or value

7.

Income paid (except certain gross proceeds from the sale or redemption of property) (2015 reporting)

 

2017

 

When  to Report

September 30

FFIs in Model 1 IGA jurisdictions:

What  to Report (with respect to 2016):

 

Everything reported in (1) through (7) for 2015

8.

Gross proceeds paid to custodial accounts

 

After 2017

 

When  to Report

September 30

FFIs in Model 1 IGA jurisdictions:

What  to Report (with respect to previous year):

 

Everything reported in (1) through (8) for 2016

 

Source http://www.irs.gov/Businesses/Corporations/Summary-of-FATCA-Timelines

For Financial Institutions (FI)

All FIs should register with the IRS and obtained a Global Intermediary Identification Number (GIIN), ahead of the first reporting date (Sept 30th 2016). In addition, these entities should pay close attention to the schema provided by the US when developing their reporting mechanisms (http://www.irs.gov/Businesses/Corporations/FATCA-XML-Schemas-and-Business-Rules-for-Form-8966). This will ensure the smooth flow of information once reporting commences. 

For further Information

Please contact:

Inland Revenue Department Compliance Officer atTelephone:  1-758-468-4779 

 

 

 

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Ⓒ2013 Inland Revenue Department, Government of Saint Lucia.