What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is intended to assist US citizens and residents who transact business outside the US in complying with the United States (US) Tax law.
FATCA was enacted in 2010 by the US Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) such as Citizens Bank to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Failure to comply with FATCA will result in a 30% withholding tax being deducted from U.S. sourced income.
When FATCA Became Law?
FATCA became effective on July 1, 2014.
FATCA’s Application to Guyana
Guyana has amended Section 63 of the Financial Institutions Act to designate the GRA as the Competent Authority on behalf of the Government of Guyana. This will allow financial institutions to provide the GRA with customer information on reportable accounts.
FFI’s in Guyana will be required to submit FATCA reporting to the Guyana Revenue Authority (GRA) which will in turn report to the IRS.
Identification of Reportable Thresholds
Individuals whose accounts are equal to or in excess of US$50,000 or GYD $10,000,000. Entities whose accounts are equal to or in excess of US$250,000 or GYD $50,000,000.
How to Identify US Account Holders Under FATCA?
Under the FATCA, a ‘U.S. person’ is identified as one who meets one or more of the following indicia (A US Indicia is an indicator that an individual/entity has some affiliation to the United States.):
- U.S. citizenship or lawful permanent residence (green card) status;
- A U.S. birthplace;
- A U.S. residence address or a U.S. correspondence address (including a U.S. P.O. box);
- A current US telephone number; an “in care of” U.S. address or a “hold mail” U.S. address that is the sole address with respect to the client;
- A Power of Attorney or signatory authority granted to a person with a U.S. address; or
- Any non-financial foreign entity (such as a privately held operating business, professional services firm, foreign trust or foreign partnership) in which one or more ‘U.S. Persons’ own more than 10% either directly or indirectly.