A few moments ago, Premier of the Virgin Islands Dr. the Honourable D. Orlando Smith, OBE signed a Model 1B intergovernmental agreement (IGA) in relation to the United States (US) Foreign Account Tax Compliance Act (FATCA) at the Department of Treasury in Washington, DC.
Premier Smith is accompanied by Financial Secretary Mr. Neil Smith and one of BVI’s FATCA advisor Mr. Daniel J. Mulcany, senior counsel at Cadwalader, Wickersham & Taft LLP.
Premier Smith said, “The formal signing of the IGA is the final step in this phase of FATCA implementation. This signing allows financial institutions organised in the Virgin Islands to prepare for the implementation of FATCA on the basis that there will be an effective IGA in place by January 1, 2015.”
According to the Financial Secretary, a key benefit of the IGA is that the Territory’s financial institutions have until the end of 2014 to obtain a Global Intermediary Identification Number (GIIN).
The next phase of implementation will be the creation and issuance of Guidance Notes that assist financial institutions and other parties in the Territory in determining their requirements under the IGA.
Mr. Smith explained that the Government of the Virgin Islands will issue a draft of the Territory’s Guidance Notes for industry comment.
Members of the financial services industry and the public will have a number of opportunities to provide feedback on the Guidance Notes. This includes participation in a series of workshops that will be undertaken for the financial services industry and facilitated by KPMG (BVI) Limited.
He explained, “The aim is that – with industry and specialist input – the Guidance Notes will adequately address any BVI-specific situations with sufficient clarity that the requirements of the IGA can be understood and performed.”
He added, “The Guidance Notes will then be updated and amended as required before being issued in final. In addition, legislation enabling the implementation of the IGA and Guidance Notes will be enacted, paving the way for compliance.”
Mr. Smith said that the infrastructure required to enable the Government of the Virgin Islands to receive, collate and pass on information submitted to it by financial institutions is currently being put in place in readiness for the first reporting date.
On April 4, 2013 Government of the Virgin Islands announced that it would enter into negotiations with the US Government with the objective of finalising a Model 1B IGA in relation to the US FATCA.
FATCA is a United States federal law that requires United States persons living outside the United States to report, among other things, their income to the Internal Revenue Service (“IRS”).
Government will continue to work closely with Mr. Mulcahy and other attorneys of Cadwalader including Mark P. Howe and Adam S. Lurie, who are advising and assisting Territory in its efforts to implement and comply with the agreement.