UPDATE: Reporting obligations under FATCA on US persons not VI Gov’t- Premier
Premier Smith’s statement on the subject has come in response to a statement issued to the media by Opposition Member Hon. Julian Fraser R.A. on August 27, 2013 in which he accused the Premier of selling out the privacy of VI citizens to the US.
The Third District representative argued that no other country regards the privacy of its citizens more highly than the United States of America but yet the NDP Government is intending to intrude on Virgin Islanders privacy by collecting information on their citizenship, and immigrant status with the United States, diving into their bank accounts; diving into their property ownership inclusive of inheritance; diving into their incomes; and reporting this to the Government of the United States.
But according to Premier Smith, he considers it irresponsible that anybody should seek to obtain political mileage over an issue that is so real and fundamentally important for citizens and businesses that qualify as US persons under FATCA.
“The BVI public needs to know and understand that FATCA is a United States Law designed to ensure tax compliance by US persons (which includes individuals and businesses) with foreign accounts and assets. The law is of universal application against US persons, unlike the tax regimes of many jurisdictions including the BVI. Already, all US persons, including BVI/Americans and US persons investing in the BVI are currently required to report to the US Government," Premier Smith said in his statement sent to media houses today, August 29, 2013.
The leader of the ruling National Democratic Party (NDP) insisted that FATCA does not place an obligation on any foreign government, but its implementation has potential economic ramification for jurisdictions that may have trading links with the United States, whether directly or indirectly, as it enables the US tax authorities to place a withholding tax in relation to all transactions made in or passing through the United States as they relate to US persons.
Accordingly, Premier Smith said, many jurisdictions around the world (France, Germany, Italy, Japan, United Kingdom, Bahamas, Bermuda, Cayman Islands and other countries within the Caribbean region) considered the need to work out mechanisms to lessen the burden of reporting under FATCA on their citizens and businesses that may be affected.
“As I have said before, under FATCA the reporting obligations to the United States authorities are placed on the US persons, not on the Government of the BVI. However, in order to relieve the burden of reporting and the costs associated therewith, many governments have discussed or are in the process of discussing with the US Treasury regarding negotiating inter-governmental agreements (IGAs) which would allow qualified US persons to submit their reports to their governments rather than directly to the United States tax authorities.”
The Premier said his Government had held various meetings with stakeholders in the VI to establish what would be the preferred approach – reporting directly to the US IRS or through the VI Government and that overwhelmingly, the latter was preferred and it was on that basis that his Government commenced the negotiation process for an IGA with the US Treasury.
“It is important for the BVI public to know and understand that, contrary to what the Member of the House of Assembly is alleging, the BVI Government’s role with FATCA is merely to facilitate the reporting obligations of US persons resident in the BVI and thus reduce any costs to them associated with any direct reporting to the United States tax authorities.”
Under the proposed IGA, Premier Smith said, Government would merely serve as a conduit in transmitting information provided to it by persons complying with their reporting obligations. “It is not and will not be the duty of the Government to collect ‘information on their citizenship, and immigration status with the United States’ as alleged by the Member,” Premier Smith emphasised.
“Nobody is acting as the policeman for the United States; we are doing merely what a responsible government should do (where it can) to alleviate burden on its citizens. And I reiterate the point I made on 20th August, 2013: 'the BVI is not being forced or coerced into finalizing an IGA, but instead we are of the opinion that this is what is best for the British Virgin Islands.'"
It was also stated that Government intends to undertake a sensitisation campaign across the Territory to advise and better inform VIslanders who are US citizens or Green card holders of their obligations under FATCA and to enable them to determine whether they can benefit from the reporting exemptions under FATCA.
“As and when the IGA negotiation is concluded and the agreement signed, appropriate legislation will be reviewed and taken before the House of Assembly to enable a proper facilitation of the implementation of the IGA,” Premier Smith concluded.
See previous article posted August 27, 2013
Hon. Fraser accuses Premier of selling out privacy of VI citizens to US
-First UK's Protocol now America's FATCA -incompetence or weakness, which government is it?- Hon. Fraser asks
“Who gave the Premier of the Virgin Islands the right to trade the liberty of its citizens to a Foreign Government? By that I mean, does the Premier of the Virgin Islands have a mandate from the citizens of the Virgin Islands who happen to also be citizens of the United States, or Green Card holders, to seek and find personal information such as their bank accounts, salaries, and properties and report this information back to the Government of the United States?”
Those are some of the questions Third District Representative and Opposition Member, Hon. Julian Fraser RA has rhetorically asked in a press release sent out to the media this morning, August 27, 2013.
Hon. Fraser strongly believes that negotiations between the Virgin Islands and the United States on an Intergovernmental Agreement (IGA) which is expected to meet obligations under the Foreign Account Tax Compliance Act (FATCA) will ultimately result in an invasion of privacy and taxation for all US citizens and Green Card Holders in the Virgin Islands, whether they are Virgin Islanders or not.
“This impacts a lot of very unsuspecting persons, persons such as those who were born in the US and never lived a day there, but have amassed fortunes here in the Virgin Islands, but will now have their properties, savings accounts, and salaries voluntarily offered up to Uncle Sam by our Premier to be taxed. All this is happening and the Premier has a difficulty giving straight answers on the matter. It is like everything else where he behaves as if he is accountable to no one,” Hon. Fraser stated.
According to the very active Opposition Member, Premier Dr The Hon. D. Orlando Smith has repeatedly denied Hon. Fraser’s suspicions but his recent comments at a press conference further raise concerns.
Hon. Fraser recalled that on Thursday May 30, 2013 in an address to his constituents and wider VI at his Biannual District Meeting, he reported that the Premier had been hinting of his Government's intervention into a United States matter of tax collection with its citizens.
“The United States in its decision to hunt and tax its citizens and permanent residents across the globe on property, income, and savings interest is now allied with the NDP Government in the Virgin Islands. This is an invasion of privacy of the citizens of this territory, which our Government should have nothing to do with,” Hon. Fraser had charged.
The Third District representative argued that no other country regards the privacy of its citizens more highly than the United States of America but yet the NDP Government is intending to intrude on Virgin Islanders privacy by collecting information on their citizenship, and immigrant status with the United States, diving into their bank accounts; diving into their property ownership inclusive of inheritance; diving into their incomes; and reporting this to the Government of the United States.
“This has nothing to do with neither the Tax Information Exchange Agreements, nor the Tax Haven issues that are hot in the news today. This is the only country that I know of, that is volunteering to do the United States policing of its citizens. The big question for you the citizens of the Virgin Islands; is the NDP government going to ask the US government to check the assets such as property ownership; and incomes earned by Virgin Islanders and Belongers living in the United States and United States Virgin Islands and report it back here so we can tax them on it too?” Hon. Fraser had asked.
The press release further stated that the following Tuesday, June 4, 2013 the Premier was out denying that this was the case. "I need only say that contrary to what is said in the address the BVI government is not collecting information on the citizenship and immigrant status with the United States on its citizens, nor is the government diving into their Property ownership or Income," Premier Smith had reportedly stated in the media.
The release also referenced a statement made by the Premier in the House of Assembly (HOA) on June 29, 2012 on the Foreign Account Tax Compliance Act (FATCA). “In this statement it was revealed that a committee has been established for the sole purpose of exploring the option of a government to government treaty whereby the Virgin Islands would collect information on US Citizens and Green Card Holders and report it to the US Government,” Hon. Fraser recalled.
“Mark well the Premier's denial of my charge in my May 30th address, but watch what the Premier is saying to you the people on August 20th, just past.”
Premier Smith had told reporters, “Negotiations are still ongoing between the Virgin Islands and the United States on an Intergovernmental Agreement (IGA) which is expected to meet obligations under the Foreign Account Tax Compliance Act (FATCA)….We are of the very considered opinion that this course is the best one to adopt for the BVI. We have already commenced talks with the US Treasury and expect to continue to do so until a final agreement is reached. It is therefore very important that we all understand that the BVI is not being forced or coerced into finalizing an IGA, but instead we are of the opinion that this is what is best for the British Virgin Islands."
Hon. Fraser said he is particularly concerned of the so called obligations under FATCA as mentioned by the Premier as those obligations are not those of the Government of the Virgin Islands. He further said the Premier needed to keep the government out of the business of private citizens and residents.
“The ramifications of his actions go beyond the eyes of ordinary citizens and will affect our economy in ways that are irreversible. Take for instance the many US citizens who often acquire Non Belonger Landholding Licenses and build vacation homes here valued in the millions of dollars. What are the chances of them continuing to come here knowing that the Premier will be sending to the US government information on the dollar value of their every investment? And further, what is the likelihood of those already here selling out their interest? This is also true for our major investors in our resorts and yachting facilities here on Tortola and on Virgin Gorda in particular. And the list goes on.”
Hon. Fraser stated that the obligation to report these assets lies with the individual, and any banking institution involved, not the Government of the Virgin Islands. “There is a reason Tax Lawyers and Tax Accountants exists, one such reason is that they are best qualified to report income to the authorities on behalf of their clients. The Government of the Virgin Islands is not. As far as the poor Virgin Islander is concern, your Premier will have someone go to Land Registry and see what properties you own, have it assessed and report the value to the United States Treasury and they will tax you on it. They will do the same with your bank account, and also your pay check,” Hon. Fraser stated.
The Opposition Member further alleged that Premier Smith has already compromised the Virgin Islands financial autonomy with the United Kingdom with the Protocols, “where they now tell us how to spend our own money, they are just about approving our budget, and God forbid we must borrow money; we have to get their permission, even from our own Social Security Board. And now he is about to make us subservient to the United States even while in our own country, by trading information on Land Inherited from our Ancestors, and compromising our liberties with FATCA.”
It is Hon. Fraser's firm belief that the Premier and his administration are overreaching and must be stopped.
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66 Responses to “UPDATE: Reporting obligations under FATCA on US persons not VI Gov’t- Premier”
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accounts or other specified financial
assets must report them on a new
Form 8938 which is filed with the
person's U.S. tax returns if they are
generally worth more than US$50,000; [17] a higher reporting threshold applies to overseas residents and others.[18][19] Account holders would be subject to a 40% penalty on
understatements of income in an
undisclosed foreign financial asset. [14][20] Understatements of greater than 25% of gross income are subject
to an extended statute of limitations period of 6 years.[21] It also requires taxpayers to report financial assets
that are not held in a custodial
account, i.e. physical stock or bond certificates.
All these U S Citizens who are working here and are being paid humongous salaries need to be exposed. If you are living in St. John, then work in St. John.
Please do some research on your own on FATCA. This member of the house is totally irresponsible with his
constant fear mongering and is factually incorrect,in large part, about the implications of the FATCA. He does'nt understand the wider context of FATCA and its importance in preserving our Financial Services Industry.
The number of BVI-Americans in BVI that it will affect is negligible, and most of them will be exempted because of minimal thresholds. FATCA relates to sharing information on "financial accounts", by foreign financial institutions (of their US citizens customers), not by Government.
Fraser is reaching with his allegations of the impact, and showing his ignorance for those of us who now better. He needs to be clear, truthful etc if he wants to help the people of BVI who are also Americans. He must stop playing politics and hungering for power!
And he certainly should himself as an American, truly understand what the FFI's (not the Premier/Not the Government) will be reporting on him.
http://www.out-law.com/en/sectors/financial-services1/banks/foreign-account-tax-compliance-act-fatca/
The US law says the individual interest holder or the banks must report the interest to the US Government, not the Premier. So why is he getting involved?
Some US citizens even consider moving elsewhere, its gotten so out of hand. The United States is a
kinder gentler bully and England is the gentleman bully. Well bully for them! When bullies run the
world it's a bunch of bull.