GUYANA will enter into an inter-governmental agreement (IGA) with the United States (U.S.) to help the latter ensnare its citizens who are evading taxes on income earned through non-U.S. financial institutions and other foreign entities.In his 2014 Budget presentation, Finance Minister, Dr. Ashni Singh disclosed that the Guyana Revenue Authority (GRA) has been identified as the conduit of financial information between Guyana and the U.S. Inland Revenue Service (IRS) towards collaboration with the U.S. Foreign Account Tax Compliant Act (FATCA).
A knowledgeable local source said that FATCA was passed in the U.S. in 2010 because that country had found that every year it loses an estimated $100 billion in tax revenues due to offshore tax abuses by its citizens.
The informant said the main aim of FATCA is to identify U.S. taxpayers who have accounts in foreign financial institutions (FFIs) or ownership interests in non-financial foreign entities (NFFEs) and enforce the reporting on them by the owners, through the threat of a withholding tax.
An FFI which enters into an arrangement with the IRS is referred to as a Participating Foreign Financial Institution (PFFI).
In Guyana, local banks, credit unions and insurance companies are considered FFIs, and those that do not enter into an agreement with the IRS are referred to as a non-participating foreign financial institutions (NPFFIs).
PFFIs will be required to examine their existing accounts to determine who are U.S. citizens, identify such new account holders, provide annual reports on them and withhold payments to recalcitrants who refuse to disclose relevant data.

WITHHOLD PAYMENTS
The PFFIs can also withhold payments to NPFFIs or non-financial foreign entities (NFFEs), unless the NPFFIs or NFFEs satisfy certain requirements.
As things stand, the source said NFFEs such as insurance companies whose business consists solely of issuing insurance or reinsurance policies without an investment or cash value (term life, health, property, casualty, etc.) will be able to avoid withholding taxes.
Participating FFIs will be expected to refuse to conduct business with non-compliant FFIs and NPFFIs.
The source said that the U.S. Treasury has entered into inter-governmental agreements (IGAs) with a limited number of countries which will facilitate the transfer of information.
He explained: “Now Guyana, through the Finance Minister, has indicated its willingness to support FATCA.”
FATCA is, generally, regarded as the beginning of the establishment of a central worldwide clearing house for the exchange of taxpayer information amongst countries.
By Clifford Stanley