“The signing of the FATCA IGA is universal… Also, contrary to what others claim, this is not about selling out anything,” Premier Dr. the Hon. D. Orlando Smith announced during a press briefing on 8 July. The BVI Leader made the comment as he announced that Government signed a Model 1B intergovernmental agreement (IGA) in relation to the United States (US) Foreign Account Tax Compliance Act (FATCA) on June 30.
Dr. Smith explained that FATCA is a United States federal law that is universal, and requires United States persons living outside the United States to report, among other things, their income to the US Government.
He said that several governments in the Caribbean and around the world like France, Germany, Italy, Japan, United Kingdom, Bahamas, Bermuda, Cayman Islands for example, have signed practically identical agreements. According to Hon. Smith these IGAs are in place to lessen the burden of reporting and the costs associated to its citizens and financial institutions.
“By entering into an intergovernmental agreement with the United States, the BVI and all the many countries around the world that have done so, have simplified the requirements to comply with FATCA for the financial institutions within their borders. Also, essentially we have all prevented the automatic application of a thirty percent withholding tax from being applied to these institutions, if they were not compliant,” Premier Smith announced.
Dr. Smith also took a swipe at the critics who expressed concerns over the fact that Government has signed the agreement. He said: “Contrary to some opinions, signing an intergovernmental agreement (IGA) with the United States on FATCA has not compromised the individual in the BVI and has indeed provided a mechanism that allows the financial institutions in the BVI to report in a very simplified way to the US and has also given US taxpayers in the BVI the time and mechanisms through which they can correct any outstanding reporting concerns that they may have had.”
The BVI Leader further defended the decision to sign on to FATCA by stating: “I said this before and I will say it again, we are doing merely what a responsible government should do: one, alleviate the burden on its citizens to comply with this universal law; and two, protect our financial services industry by helping the financial institutions to comply with this obligation.”
The BVI Leader said that Government is aware that some Virgin Islanders are also US citizens or Green Card holders, and are affected by the agreement. This is why he said that last year Government embarked on a public education campaign informing residents about FATCA. “We engaged in online communications, we made appearances on different television programmes, we held several town hall meetings which had an excellent turn out. We made brochures available and we utilised radio and television advertisements to sensitise the public of the FATCA implications,” Dr. Smith stated.
Now that the signing has been completed, Premier Smith announced that Government will be rolling out the second phase of the campaign, where they will continue to educate and inform the public, as well as the financial institutions. It was announced that details on this campaign will be forthcoming in the coming weeks.