Earlier this week, Member of the House Assembly of the Virgin Islands, Hon. Julian Fraser, issued a statement on matters largely concerning the US Foreign Accounts Tax Compliance Act (commonly known as “FATCA”).
Ordinarily I would not have responded to the allegations made in his statements, but I do so simply for the fact that I believe Virgin Islanders and indeed the BVI public in general should not be misled.
I consider it irresponsible that anybody should seek to obtain political mileage over an issue that is so real and fundamentally important for our citizens and businesses that qualify as US persons under FATCA.
It is the duty of my Government and indeed of any government to educate its public on issues that have or are likely to have serious ramifications for them. This is why I have on several occasions made comprehensive statements both in the House and in the media on FATCA.
The BVI public needs to know and understand that FATCA is a United States Law designed to ensure tax compliance by US persons (which includes individuals and businesses) with foreign accounts and assets. The law is of universal application against US persons, unlike the tax regimes of many jurisdictions including the BVI. Already, all US persons, including BVI/Americans and US persons investing in the BVI are currently required to report to the US Government.
FATCA does not place an obligation on any foreign government, but its implementation has potential economic ramification for jurisdictions that may have trading links with the United States, whether directly or indirectly, as it enables the US tax authorities to place a withholding tax in relation to all transactions made in or passing through the United States as they relate to US persons.
Accordingly, many jurisdictions around the world (France, Germany, Italy, Japan, United Kingdom, Bahamas, Bermuda, Cayman Islands and other countries within the Caribbean region) considered the need to work out mechanisms to lessen the burden of reporting under FATCA on their citizens and businesses that may be affected.
As I have said before, under FATCA the reporting obligations to the United States authorities are placed on the US persons, not on the Government of the BVI.
However, in order to relieve the burden of reporting and the costs associated therewith, many governments have discussed or are in the process of discussing with the US Treasury regarding negotiating inter-governmental agreements (IGAs) which would allow qualified US persons to submit their reports to their governments rather than directly to the United States tax authorities.
My Government had held various meetings with stakeholders in the BVI to establish what would be the preferred approach – reporting directly to the US IRS or through the BVI Government. Overwhelmingly, the latter was preferred and it was on that basis that my Government commenced the negotiation process for an IGA with the US Treasury.
It is important for the BVI public to know and understand that, contrary to what the Member of the House of Assembly is alleging, the BVI Government’s role with FATCA is merely to facilitate the reporting obligations of US persons resident in the BVI and thus reduce any costs to them associated with any direct reporting to the United States tax authorities.
Under the proposed IGA, the Government would merely serve as a conduit in transmitting information provided to it by persons complying with their reporting obligations. It is not and will not be the duty of the Government to collect “information on their citizenship, and immigration status with the United States” as alleged by the Member.
Nobody is acting as the policeman for the United States; we are doing merely what a responsible government should do (where it can) to alleviate burden on its citizens.
And I reiterate the point I made on 20th August, 2013: “the BVI is not being forced or coerced into finalizing an IGA, but instead we are of the opinion that this is what is best for the British Virgin Islands”.
Furthermore, in order to specifically inform individual Virgin Islanders who are also US citizens or Green Card holders, my Government has commissioned KPMG to carry out a study on FATCA with a view to enabling a better understanding of individual obligations and the ramifications for non-compliance. This will also enable them to understand whether they are exempt from reporting under FATCA.
Once this report is finalised, my Government intends to undertake a sensitisation campaign across the Territory to advise and better inform BVIslanders who are US citizens or Green card holders of their obligations under FATCA and to enable them to determine whether they can benefit from the reporting exemptions under FATCA.
As and when the IGA negotiation is concluded and the agreement signed, appropriate legislation will be reviewed and taken before the House of Assembly to enable a proper facilitation of the implementation of the IGA.
Let me record the fact that this matter is not and should not be made a political issue.
FATCA is becoming a reality, and an emerging new global standard in tax information sharing. It is incumbent on any responsible person to be straight with our people and offer solutions, not create confusion by misleading them.
My Government will continue its current efforts in charting the best solutions achievable in order to alleviate any burden on our people and businesses that may be associated with the implementation of FATCA and we will keep the public informed on developments.
We must not forget that as a Territory we enjoy a special relationship with the United States, which amongst other things, continues to provide access to banking, medical and other facilities to our people.
In fact, successive governments in the BVI have always promoted that relationship, something the Member of the House of Assembly is fully aware of. And all the more reason why we should not allow him to lead us down the road of misinformation and unwarranted confrontation.
What my Government is doing in relation to FATCA is no different from what other governments within the Caribbean region and around the world are doing or have already done.
Clearly, we all cannot blindly be doing the wrong thing as the Member would have us believe.
As a Territory we continue to pride ourselves as genuine partners in promoting international cooperation while at the same time robustly safeguarding our interests.
The BVI public can count on my Government to continue along that path.