House Approves Bill to Allow for Exchange of Financial Information

A Bill seeking to amend the Revenue Administration Act, allowing for the exchange of financial or other information which is to be used for tax purposes in order to improve international tax compliance, was passed in the House  on July 21.

Piloting the Bill, Minister of Finance and Planning, Dr. the Hon. Peter Phillips, said the Act is being amended to facilitate the introduction of an international tax compliant regime.

He added that these amendments contemplate the advent of new international standards and instruments, and give effect to greater transparency of information for tax purposes.

“The Foreign Accounts Tax Compliance Act (FATCA) of the United States (US) represents one such instrument and the agreement to give effect to this, which was signed by the Government of Jamaica and the US, has to be incorporated into our domestic legislation,” Dr. Phillips said.

Under the amendments in the Bill, effective August 17, financial institutions in Jamaica will be required to make the relevant financial reports to Tax Administration Jamaica (TAJ) on financial accounts held by US taxpayers, including entities in which the US taxpayer holds a significant ownership interest.

However, for all subsequent years, the reporting date will be May 31 of each year.

The TAJ will also have to submit the relevant information received from local financial institutions to the Internal Revenue Service (IRS) in the US.

FATCA, which was enacted in 2010 by the US Government as part of provisions under the Hiring Incentives to Restore Employment (HIRE) Act, is an important development in the US’ efforts to combat tax evasion by US tax payers with investments in offshore accounts.

FATCA is of particular significance to Jamaica’s financial services sector, as it places an obligation on foreign or non-US financial institutions to report to the IRS, information about financial accounts held by US taxpayers, including entities in which the US taxpayer holds a significant ownership interest.

Currently, Jamaica has some 11 double taxation agreements, nine tax information exchange agreements and one multilateral double taxation agreement within CARICOM.