Bankers fearful of Fatca regulations

POSTED: 02/21/13 9:08 AM

St. Maarten -Finance Minister Roland Tuitt recently met with the bankers association on St. Maarten to discuss the implementation of the United States’ Foreign Account Tax Compliance Act (FATCA). The act obliges foreign financial institutions to report American account holders with assets exceeding $50,000 to the Internal Revenue Service (IRS).

Tuitt reported yesterday that one of the biggest fears of the bankers is the cost that will be associated with the implementation of Fatca. As this newspaper reported last year following an exclusive interview with Windward Island Bank managing director Jan Beaujon, these costs may be passed on to the consumer. The Minister of Finance confirmed this during the Council of Ministers weekly press conference.

“All of the members are busy putting things in place so that they can be ready by year end but one of the biggest fears is the cost of putting all of the changes of this system in place. It is an enormous cost and probably it will have to be passed on to the consumers,” Tuitt said.

During his meeting with the bankers, information that the government received from the US was provided. A follow up meeting will be held soon.

In 2010 the United States enacted Fatca. Foreign financial institutions like banks, pension funds, insurance companies, asset managers and private equity funds had to enter into an agreement with the IRS by June buy valium roche online uk 30.

However St. Maarten was given a one year extension by the United States and has until January 1, 2014 to implement FATCA regulations.

Under the regulations, financial institutions will be obliged to undertake certain identification and due diligence procedures with respect to its account holders and report to the IRS annually on its account holders who are US persons or foreign entities with substantial US ownership. They will also be obliged to withhold and pay over to the IRS, 30 percent of any payments of US source income, as well as gross proceeds from the sale of securities that generate US source income.

Minister Tuitt explained the rationale behind the government’s involvement.

“If government does not get involved, each institution on the island, however small, will have to go and make an agreement with the IRS and that’s inefficient and probably ineffective because the large banks will have a good negotiating team while the small individuals may not have a good team to negotiate on their behalf. It will also cost them a lot of money. You need a strong negotiation team to face the IRS.”

The Finance Minister is heading to the Netherlands on a fact finding mission. His agenda includes finding out how far Holland has gone in implementing FATCA regulations. Tuitt says that if Holland’s model is convenient for St. Maarten, then it will be adopted.

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