By David Rowe
Op-Ed Contributor
Jamaican green card holders and US citizens resident in Jamaica should be aware of the FATCA statute.
The Foreign Account Tax Compliance Act has been passed and will affect these two categories of individuals when it is applied to Jamaica.
US citizens include native-born US citizens and naturalized citizens.
FATCA will require Jamaican banks to report directly to the IRS information about financial accounts held by US taxpayers. The legislative intent of FATCA is to ensure that there is no gap or shortfall in the ability of the US to determine the ownership of US assets in bank accounts in Jamaica.
The IRS has been cracking down on those who use offshore accounts to evade taxes through the use of offshore accounts and assets. FATCA is a
major revamping of the US withholding system, imposing a 30 percent withholding tax on certain payments made to foreign financial institutions that refuse to identify US account holders and investors.
US and Jamaican regulators are already cooperating and they may examine FATCA reports for analysis under the Jamaican Proceeds Of Crime Act or the Money Laundering Act or the US RICO statute.
FATCA makes local Jamaican banks the engines of compliance. Certainly, no local bank will risk having to pay the 30 percent withholding for FATCA non-compliance.
It is frequently forgotten in Jamaica that green card holders must pay US taxes on their worldwide income. FATCA makes it possible for the IRS to determine with more accuracy which green card holders and US citizens in Jamaica are not paying their share of US taxes.
Jamaicans should be establishing themselves with savvy tax accountants.
It is believed that some Jamaican green card holders actually live in Jamaica and ignore their US tax liabilities until it is time for them to file for naturalization.
What are the benefits?
FATCA will lead to greater compliance by green card holders and US Citizens in Jamaica. Many will give up their green cards rather than face the reality of imposed taxation. Some illegal money may leave the formal banking system for good.
Indeed, US regulators think FATCA is a move in the right direction; some Jamaican green card holders think it is burdensome .
The indications are that Jamaican financial institutions have already given their green light on FATCA and have indicated that they intend to comply.
Perhaps the Jamaican Parliament should enact local legislation to mirror FATCA so that the enforcement of the law remains local and the sharing of information is immediate. Jamaican banking privacy laws may have to be statutorily revised to permit FATCA reporting.
David P Rowe is an attorney in Jamaica and Florida and a law professor at the University of Miami School of Law in Coral Gables, Fla.
Note: the opinions expressed in Caribbean Journal Op-Eds are those of the author and do not necessarily reflect the views of the Caribbean Journal.
