BVI Government signs Model 1B IGA in relation to FATCA
The BVI Government has signed a Model 1B (non-reciprocal) Intergovernmental Agreement (IGA) in relation to the US Foreign Account Tax Compliance Act (FATCA), it was announced on 30 June 2014.
It was announced in March this year that negotiations had been concluded with the US and later in April the US enabled those jurisdictions (including the BVI) that had reached an agreement in substance to be treated as if the agreement had been signed. See the March 2014 Harneys legal update here: http://www.harneys.com/
The US announcement took some of the pressure off the formal signature of the IGA as it meant that BVI Financial Institutions could apply for a GIIN notwithstanding that the IGA had not been signed. Nonetheless with FACTA coming into force in the US today, the signing of the IGA is very welcome as it will enable the IGA to be published and planning and implementation of the BVI regime to enter the next stage.
The US has now entered into a Model 1 or Model 2 IGA or reached agreement in substance with nearly 90 jurisdictions to facilitate the automatic exchange of tax information. An up to date list of the IGA jurisdiction is available on the US Treasury website at this link http://www.treasury.gov/
As expected the final IGA is in substantially the same form as the model agreement. There are, however, a number of special provisions dealing with the treatment of BVI retirement plans.
Next Steps
The BVI Government press release notes that there are a number of steps to be taken by the BVI Government in order to implement the IGA:
The release of draft FATCA Guidance Notes to help BVI financial institutions interpret their responsibilities under FATCA (and UK FATCA). Harneys has participated in a Government Working Group led by KPMG which has prepared the draft Guidance Notes.
A public consultation process on the Guidance Notes is expected to commence shortly.
Enabling legislation will be enacted to incorporate the requirements of the IGA into BVI law.
Although legislation to implement the IGA has not yet been introduced, it will when effective require reporting of certain transactions occurring on or after 1 July 2014. In particular, BVI Financial Institutions should ensure that they are collecting sufficient information about the holders of new accounts opened on or after 1 July 2014.
