Guernsey Implements Automatic FATCA Exchange
Guernsey has welcomed the results of a United States (US) review of its procedures and systems confirming the adequacy of the island’s data safeguards and infrastructure under the US Foreign Account Tax Compliance Act (FATCA).
The US Inland Revenue Service (IRS) recently undertook the review to ensure that procedures and systems are in place so that information exchanged is kept safe and confidential and that there can be an effective exchange relationship.
Both the US and Guernsey need to be satisfied that they each have the necessary procedures and systems to exchange information effectively and the IRS has provided the Guernsey Income Tax Office with detailed information on its own practices and procedures to demonstrate that the US complies with the same stringent requirements that it expects of its exchange of information partners.
Rob Gray, Guernsey’s Director of Income Tax, said: “It is vital that all jurisdictions which exchange, often sensitive financial information under TIEAs or other formal agreements, for tax purposes, can be certain that the recipient territory will keep it confidential and safe and use it only for the purposes for which it was exchanged.”
FATCA, which was enacted by the US Congress in 2010 and which took effect on July 1, 2014, is intended to ensure that the US Internal Revenue Service (IRS) obtains information on financial accounts held at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
