Q&A About the US Foreign Account Tax Compliance Act (FATCA)
Q: What is FATCA?
A: FATCA is the US Foreign Account Tax Compliance Act that has been enacted by the US Government, and will come into effect as of January 2013.
Q: What is FATCA about?
A: The US law calls for financial institutions worldwide to sign an agreement with the US Internal Revenue Service (IRS) to identify, document and report savings, investment and life insurance on “US Persons” with accounts in their respective institutions. You are deemed a “US Person” if you fall into any of the following categories:
- A dual citizen
- A US citizen residing outside the US
- A US passport holder
- Born in the USA
- Green Card holder
- A non-US citizen who has substantial presence in the US, for at least 183 days (6 months)
Q: I have an account in Jamaica, will I be affected how will FATCA affect me?
A: If you are a “US person” and you have more than US$50,000.00 (approximately J$4.3 million) in savings or investment in Jamaica, or any other non-US territory, you are likely to be affected.
Q: What information will be reported if JN signs the FATCA Agreement?
A: Foreign Financial Institutions (FFI) which enters into an Agreement with the IRS will need to report the following information about their US accounts:
- The name, address, and Taxpayer Identification Number (TIN) of each account holder, who is a specified United States person; and, in the case of any account holder that is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of the entity.
- The account number
- The account balance or value Gross receipts and gross withdrawals or payments from the account
Q: Does it apply to remittance and loan payments?
A: The simple transfer of money from someone in the US to someone in Jamaica, or any other foreign country, will not be impacted by FATCA withholding. However, money and income earned that is transferred into a US account will be subject to the FATCA reporting requirements.
Q: Which financial institutions in Jamaica will come under the law?
A: All financial institutions in Jamaica will be affected.
Q: Will my funds be accessible to the US Government?
A: Only in respect of withholding taxes, if applicable.
Q: What if I refuse to provide my information?
A: No financial institution can hand over your information to the US without your consent. However, the US law is requiring all financial institutions to withhold a 30% tax on accounts where a person refuses to provide information to allow the institution to determine whether or not they are a “US Person.”
Q: Will Jamaica National lobby the Government of Jamaica?
A: Yes, JN will lobby the Government of Jamaica; and will recommend that the country enters into “partnership with the US Treasury to handle this matter on a government to government basis,” and call for the savings threshold to be raised, under the law.
Q: What is Jamaica National Building Society doing about compliance?
A: Jamaica National is ensuring that all of its members are informed about the US law and who it may affect. And, the Society will keep its members briefed about the steps being taken by the Government of Jamaica to address the matter.