PHILIPSBURG, Sint Maarten –-The Democratic Party (DP) faction has requested the Finance Committee of Parliament to examine and discuss execution of the Foreign Account Tax Compliance Act (FATCA) by local banks in St. Maarten.
DP has proposed that the Bankers Association be invited to apprise Parliament of their experiences with this FATCA, which is a United States law that introduces a “reporting regime for financial institutions with respect to certain accounts.” Under this law, Foreign Financial Institutions (FFIs), such as banks, are required to report about certain foreign financial accounts and offshore assets of US taxpayers.
Another way to ensure compliance with the FATCA in foreign jurisdictions, has been with the so-called Intergovernmental Agreements.
“If a jurisdiction enters into an Intergovernmental Agreement (IGA) to implement FATCA, the reporting and other compliance burdens on the financial institutions in the jurisdiction may be simplified. Such financial institutions will not be subject to withholding under FATCA.” (FATCA website)
The Kingdom Government, on behalf of Curaçao and the US signed such an IGA. The former Minister of Finance of St. Maarten had opted not to enter into an IGA, due to the supposed pressure it puts on the foreign government, in this case St. Maarten. The banking sectors in St. Maarten and Curaçao are closely affiliated, and it would be interesting to learn how this situation plays out in practice and the experiences of local banks in complying with the FATCA.
Another potential catastrophe for the banking industry region-wide is the so-called “de-risking” by US and European banks. Some in the regional banking world have described this threat as “Armageddon.” Caricom is engaging an all-out lobbying effort and St. Maarten must keep its ears to the ground and where possible join these efforts to protect the regional and local banking industry.
It is in areas such as these that the Kingdom/Dutch government should come to the assistance of its Caribbean partners and the local Government should start its own lobbying thrust to this end.