The St Lu­cia-based Caribbean As­so­ci­a­tion of Banks (CAB) yes­ter­day urged Caribbean Com­mu­ni­ty (Cari­com) coun­tries that have not en­act­ed the For­eign Ac­count Tax Com­pli­ance Act (Fat­ca) In­ter-Gov­ern­men­tal Agree­ments (IGAs) with the Unit­ed States to do so ur­gent­ly.

CAB said it ful­ly sup­ports the po­si­tions adopt­ed by na­tion­al bankers' as­so­ci­a­tions in their ef­forts to have their re­spec­tive gov­ern­ments fi­nalise the leg­is­la­tion.

"CAB re­mains con­cerned about the num­ber of Caribbean coun­tries that do not yet have IGAs in force and there­fore re­news the call for Caribbean coun­tries to en­act the nec­es­sary leg­is­la­tion for the im­ple­men­ta­tion of Fat­ca.

"Fail­ure to do so, has far reach­ing im­pli­ca­tions for banks in terms of an in­crease in sov­er­eign risk and its im­pact on their abil­i­ty to con­duct busi­ness," CAB said in a state­ment.

The Fat­ca leg­is­la­tion, en­act­ed in the Unit­ed States in 2010, de­mands that for­eign banks pro­vide in­for­ma­tion to Amer­i­ca's In­ter­nal Rev­enue Ser­vice (IRS) on any cus­tomer deemed a "US per­son" if they have more than US$50,000.

Wash­ing­ton has said that the leg­is­la­tion aims to crack down on tax dodgers who hide hun­dreds of mil­lions of US dol­lars in off­shore ac­counts an­nu­al­ly in an ef­fort to avoid pay­ing tax­es.

In the state­ment, CAB warned that if a coun­try does not have an IGA in force, "the do­mes­tic fi­nan­cial in­sti­tu­tions in that ter­ri­to­ry will have to es­tab­lish an in­di­vid­ual agree­ment with the US Gov­ern­ment at sig­nif­i­cant cost, which may have to be passed on to their cus­tomers.

"Fail­ure to com­ply with the Act, will re­sult in a 30 per cent with­hold­ing tax on any pay­ment of in­ter­est, div­i­dends, rents, roy­al­ties, salaries, wages, an­nu­ities, li­cens­ing fees and oth­er FDAP in­come, gains and prof­its, if such pay­ment is from sources with­in the Unit­ed States.

"Ad­di­tion­al­ly, any gross pro­ceeds from the sale or dis­po­si­tion of US prop­er­ty of a type that can pro­duce in­ter­est or div­i­dends and cer­tain for­eign pass-through pay­ments will be li­able to the 30 per cent tax with­hold­ing," the CAB said.

It not­ed that there are some coun­tries that have the re­spec­tive IGAs in force, as at Jan­u­ary 27, 2017 for which they must be com­mend­ed. It named them as the Ba­hamas, Cay­man Is­lands, St Lu­cia, Bar­ba­dos, Cu­ra­cao, St Vin­cent and the Grenadines, Bermu­da, Ja­maica, Turks and Caicos, British Vir­gin Is­lands, and St Kitts and Nevis.

In Trinidad and To­ba­go, the Kei­th Row­ley Gov­ern­ment was forced to bow to op­po­si­tion de­mands that the Fat­ca leg­is­la­tion be sent to the Joint Se­lect Com­mit­tee of Par­lia­ment as both the Gov­ern­ment and Op­po­si­tion con­tin­ue to have dif­fer­ing views on the leg­is­la­tion that must be passed with a spe­cial ma­jor­i­ty in the Par­lia­ment.

Ear­li­er this month, Prime Min­is­ter Row­ley de­scribed as "an act of des­per­a­tion" the let­ter writ­ten by Op­po­si­tion Leader Kam­la Per­sad-Bisses­sar to Unit­ed States Pres­i­dent Don­ald Trump re­gard­ing Fat­ca.

In its state­ment, CAB said it "strong­ly en­cour­ages the re­main­ing Caribbean coun­tries which are not list­ed above, to en­sure that their IGAs are in force by their ex­tend­ed dead­lines in or­der to avoid the neg­a­tive con­se­quences of non-com­pli­ance with Fat­ca". (CMC)