Madam Speaker, a few sessions ago I came before this house and give a statement on the Foreign Account Tax Compliance Act (FATCA) and the effects that it would have on the Government and the people of the Virgin Islands. In this statement I described briefly the rationale behind FATCA and how it would be expected to affect the industry and private citizens here in the Virgin Islands.
I also stated that the Government of the Virgin Islands was working feverishly to ensure that the full effects of FATCA were understood and that we would be coming to this house later on to report on the latest developments.
To date Madam Speaker, we have had initial conversations with the United States Treasury, and as a result of those conversations, discussions with the industry here in the Virgin Islands and other technical investigations; we have made the decision to enter into the non-reciprocal version, or Model 1B of the FATCA Intergovernmental Agreement or IGA.
The IGA is essentially a tax information agreement that provides the framework for information exchange between the US Government and another participating Government, in this case the Virgin Islands. It will provide for entities in the Virgin Islands that are classified as Foreign Financial Institutions (FFI) to report to the Government of the Virgin Islands, as opposed to reporting directly to the US Treasury. The Government of the Virgin Islands will then pass the requisite information on to the US Treasury. This method is preferred, as opposed to the FFI reporting directly to the US Treasury, as it provides for easier compliance with FATCA by the industry here in the Virgin Islands.
Madam Speaker, FATCA allows exemptions for several types of entities. Currently we are doing further work to determine exactly which entities currently doing business in the Virgin Islands will be exempt, and on further consultations with the industry here in the Virgin Islands, and talks with the US Treasury, we will have a focused programme for the entire private business sector and public at large inform them of exactly how they will be affected, and to what extent, by this far reaching United States legislation.
Madam Speaker, FATCA is expected to have a profound effect on not only the Virgin Islands, but the entire world at large, and will affect the way business is done globally. As a result you can expect to hear much more on this matter in the very near future.
Thank you Madam Speaker.