Financial institutions must file accounts reports
HEADS of financial institutions face a fine of up to $10,000 or two years in prison if they fail to make the necessary accounts reports.
The reminder came in a statement from the Ministry of Finance, Trade and Investment this week.
It stressed that the deadline is approaching for filing information on reportable accounts held by financial institutions in the TCI.
“The Exchange of Information Unit would like to remind financial institutions of their obligations, the deadlines and the penalties for failure to file reports on reportable accounts through the TCIG – Automatic Exchange of Information (AEOI) and IDES portals,” it read.
Under the Foreign Account Tax Compliance Act (FATCA), financial institutions outside the US are required to report information on financial accounts held by their US customers to the Internal Revenue Service (IRS).
In 2015, financial institutions based in the Turks and Caicos Islands were required to provide the requisite information to the TCI Exchange of Information Unit via the TCIG – IDES or AEOI portal.
Once that information is provided, the unit is then able to forward that information onto the competent authority in the US.
If financial institutions do not comply with the US regulations with regard to the reporting and filing of returns, a 30 percent withholding tax is imposed.
The withholding tax is imposed on the US source income of that financial institution, and is done on both its own US investments and those held on behalf of its customers.
Financial institutions are also required to close accounts where their US customers do not provide the requisite information to be collected by the financial institution.
Where there are no accounts to report, financial institutions are required to file a nil return.
The Turks and Caicos Islands Government and the IRS have reached an agreement with regard to mutual assistance in joint audits.
As the TCI currently does not have an income tax regime, the Government signed a non-reciprocal BCAA with treaty partners and as such is required to provide the relevant information as required.
Financial institutions will be required to notify and report information to the ITA via Exchange of Information Unit (EOIU).
The ITA will then exchange this information with the relevant partners that have satisfied the confidentiality and data safeguards standard, and have the appropriate legal instruments and legislative frameworks in place.
A jurisdiction may require the filing of a nil return by a reporting financial institution to indicate that it did not maintain any reportable accounts during the calendar year or other reporting period.
The International Tax Compliance Regulations 2016 which came into force on April 1, 2016, gives the competent authority the power to require a reporting financial institution to provide to them with the information, including copies of any relevant books, documents or other records, or any electronically stored information.
Where a financial institution fails to make a report under or to implement arrangements or procedures in order to comply with FATCA or CRS, that they will have committed an offence under regulation 17 of the Regulations and will be liable on summary conviction to a fine of $10,000, or to imprisonment for a term of two years, or both.
Due to the passage of hurricanes Irma and Maria, the date for reporting of information for 2016 data has been extended by the IRS until September 2018.
Reporting for information for the period 2018 will remain as scheduled for June 30, 2019.
