DP puts Fatca back on the agendaPOSTED: 02/23/16 7:40 PM
St. Maarten News – It is not the first time that the faction of the Democratic Party wants to discuss the Fatca – the American Foreign Account Tax Compliance Act – and its consequences for local businesses and banks (see related story on page 3). In February 2013, there was a similar request by then MPs Roy Marlin and Leroy de Weever. Today published for the first time about the Fatca on July 26, 2012. By now, the ins and outs of the US legislation should be well-known.
The act obliges foreign financial institutions to report American account holders with assets exceeding $50,000 to the Internal Revenue Service.
Former Windward Islands Bank Director Jan Beaujon told this newspaper in 2012 that this American rule could make banking in St. Maarten “more expensive for everyone,” adding that the banks have no escape routes: “We have little choice, because if we do not comply we are no longer able to do business with the United States. All our international bank transfers go through New York.”
In 2010 the United States enacted the 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 30, 2013. These institutions are now obliged to “undertake certain identification and due diligence procedures with respect to its account holders” and to report to the IRS annually “on its account holders who are US persons or foreign entities with substantial US ownership,” this newspaper reported.
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.”
Beaujon, who is now retired from banking, said in 2012 that complying with Fatca would require an investment of “several hundred thousand dollars” in software adjustments.
Former Finance Minister Roland Tuitt thought at the time that St. Maarten would suffer from Fatca and that “a lot of banks don’t want to do business with Americans anymore.”
There was however an escape route: piggybacking on an arrangement several European countries, including the Netherlands, have made with the American tax inspectorate. Under this agreement they are not bound to withhold 30 percent from payments of US source income, and the exchange of information about tax payers will become reciprocal. So far, St. Maarten has not taken any action in this respect.