Foreign Account Tax Compliance Act

The United States Government (US) administration enacted the US Foreign Account Tax Compliance Act (FATCA) in March 2010, as part of the Hiring Incentive to Restore Employment (HIRE) Act. As a signatory to FATCA, Barita Investments Limited (as well as all other Jamaican financial institutions), will be required to disclose and report certain information on US Account holders or US owned foreign entities to the Internal Revenue Service (IRS) effective July 01, 2014.


For more information on FATCA, please speak to a Barita Client Services Representative at:
Toll Free: 1-888-429-5333 or E-mail us at: barita@cwjamaica.com

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is a US tax law that is designed to prevent tax evasion and improve the tax compliance of US taxpayers who earn income from investing in offshore investment vehicles and Foreign Financial Institutions (FFIs).

How will FATCA work?

Financial houses outside the US are classified as FFIs. FATCA will require all FFIs to enter into a disclosure agreement with the United States Internal Revenue Service (IRS). In signing the agreement, FFIs agree to:

  • Use new account opening procedures to determine if the account holder is a US person.
  • Identify existing accounts owned by US taxpayers, and report on ‘certain information’ about account holders with US $50,000, or its equivalent and above to the IRS, on an annual basis.

What does 'Certain Information' include?

Certain Information includes the following, and is to be made on ‘Specified US Persons/Entity’:

  • Name
  • Mailing address
  • US Taxpayer Identification Number (TIN)
  • Account value
  • Income for the year

Who is classified as a 'Specified US Person/Entity' or person with US indicia?

According to FATCA, a specified U.S. person/entity or the indicia of a U.S. status includes:

  • A citizen of the U.S. (including a person born in the U.S., but resides in another country)
  • U.S. lawful permanent resident status (including U.S. green card holders)
  • A person residing in the U.S. for 183 days or more
  • Entities formed under U.S. laws, excepting whose stocks regularly trades
  • Entities with 10% U.S. beneficial ownership
  • A person with a U.S. address and telephone number on file (including US P.O box)
  • Standing instructions on file to transfer funds to account maintained in the U.S.
  • An “in care of” address or a “hold mail” address that is the sole address with respect to the client
  • Power of attorney or signatory authority granted to persons with U.S. addresses
  • Non resident aliens who meet the substantial presence test.

N.B. Accounts held jointly with U.S. persons will also be treated as a U.S. account, and is therefore subject to reporting.

How will this impact you?

  • Accounts identified as having ownership by a ‘Specified U.S. Person/Entity’ will be reported to the IRS.
  • ‘Specified U.S. Person/Entity’ is asked to sign an IRS W-9 form (see www.irs.gov) to receive exemption from backup withholding taxes of 30%.
  • Non-U.S. person/entity is asked to sign a W-8 BEN form (see www.irs.gov) to receive exemption from backup withholding taxes of 30%.
  • Withholding tax of 30% on U.S. source income will be applied to the accounts of ‘Specified U.S. Persons/Entity’ deemed as “recalcitrant”.

Who are "recalcitrant" account holders?

  • Someone who fails to provide information required to determine if their account is a U.S. account.
  • FFI’s who fail to enter into agreement with the IRS.

What does U.S. source income include?

  • Interest, dividends, rent, royalties, salaries, wages, annuities, gains and profits.
  • Gross proceeds from the sale of U.S. property that can produce interest or dividends.
  • Interest paid by foreign branches of U.S. Banks.

Does FATCA comply with privacy laws and what are the consequences for non-compliance?

The Jamaican government entered into an Inter-governmental Agreement (IGA) with the United States Government effective May 1, 2014, which has made the necessary legislative changes that will ensure that these disclosures do not breach Jamaican law.

However, we may seek to obtain your waiver and ask that you acquiesce with this request, as FATCA has mandated that financial institutions are required to treat uncooperative account holders (including joint holders) as recalcitrant and either close the account or withhold 30% on all pass through payments and gross proceeds from the sale or disposition of U.S. assets which can produce interest or dividends.

Barita values the relationship of trust we have with our clients, and will continue to respect our client’s privacy in accordance with the company’s privacy policy, and safeguard personal information provided in compliance with the relevant data protection legislation for the country in which such data is being processed.

Please note that FATCA became effective July 01, 2014. For more information on the implications of FATCA, please visit the IRS website at www.irs.gov

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