…Guyana gov’t issues commencement order

TAXPAYERS of the United States (U.S.) who conduct business in Guyana will now be forced to ensure that they are fully tax-compliant, as this country has operationlised the Foreign Account Tax Compliance Act (FATCA).
The Act, which aims to strengthen international financial regulations, was operationlised after it was published in the Official Gazette on May 31, 2017. Recognition of the need to tighten regulations to reduce tax evasion lead to the U.S. introducing FATCA in 2010.
According to the U.S. Department of the Treasury, this Act requires foreign financial institutions (FFIs) to report to the Internal Revenue Service (IRS), information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

Guyana has several U.S. companies operating here, with the latest and perhaps the largest, being ExxonMobil which is currently drilling for oil offshore.
In an interview with Kaieteur News last year, Chartered Accountant Shawn Naughton, had explained that simply put, FATCA is the U.S. requiring information on foreign assets held by its taxpayers. He explained that the U.S. will also be able to better locate its taxpayers as a result of information received under FATCA. “From this information, the USA will be able to determine which taxpayers have not been reporting all of their incomes and assets. This knowledge could then lead to the relevant persons being assessed for additional taxes and associated penalties by the IRS,” the accountant said.

A FFI that does not enter into an agreement with the IRS will be subject to a 30 per cent withholding tax on certain payments, including U.S. source interest and dividends, and gross proceeds from sales of U.S. securities.
Congress enacted FATCA to target non-compliance by U.S. taxpayers using foreign accounts, and the provision has since become the global standard for promoting tax transparency. It requires U.S. financial institutions to withhold a portion of certain payments made to FFIs that do not agree to identify and report information on US account holders.
Governments have two options for complying with FATCA: they can either permit their FFIs to enter into agreement with the IRS, or they can themselves enter into IGAs with the U.S. In Guyana’s case, the latter was chosen, and an intergovernmental agreement was entered into with the U.S. in 2016.

At a post-Cabinet press briefing last year, Minister of State Joseph Harmon had said that the agreement will allow financial institutions in Guyana to identify and disclose details regarding the holders of dollar accounts. He added too that: “The signing of this IGA will also allow the conclusion of the service agreement with the software provider for the installation of reporting software relating to the Foreign Accounts Tax Compliance Act (FATCA), thus bolstering Guyana’s anti- money laundering and countering financing of terrorism thrust.”