FATCA

FATCA: What Is It? 

The United States (U.S.) Foreign Account Tax Compliance Act (FATCA) is rapidly becoming the global model for combating offshore tax evasion and promoting transparency.


FATCA, enacted in the U.S. in 2010, seeks to obtain information on accounts held by U.S. taxpayers in other countries. It requires U.S. financial institutions to withhold a portion of payments made to non-financial entities (NFFE) that do not agree to identify and report information on U.S. account holders. NFFE has the option of entering into agreements directly with the U.S. Inland Revenue Service (IRS) or through one of two alternative Model Intergovernmental Agreements (IGAs) signed by their home country.


Financial institutions in Trinidad and Tobago started submitting FATCA data to the Board of Inland Revenue on September 30, 2017, in accordance with the Model 1 Intergovernmental Agreement (IGA) that was signed with the US government in August 2016.


What conditions will JMD Investment & Commodities Trading have to meet? Which clients are impacted?


Report annually to the Board of Inland Revenue information on the following customers:


  • U.S. persons
  • US Entities
  • Non-US Entities with substantial US ownership
  • Passive Non-Financial Foreign Entities (Passive NFFE’s) with substantial US ownership
  • Non-Participating Foreign Financial Institutions (NPFFIs)
  • Report the accounts of certain customers who fail to provide sufficient information to determine their US status. These customers will be deemed'recalcitrant'’.


What is an NFFE?


Broadly speaking, it is any non-financial foreign entity that is a non-U.S. entity that:


Accepts deposits in the course of a banking or similar business;


Holds financial assets for the account of others as a substantial part of its business;


Is engaged primarily in business of investing, reinvesting or trading in securities; and


Is an insurance company (or the holding company of an insurance company) that issues or makes payments with respect to a financial account.


Entity types that are covered are:


  • Banks
  • Broker dealers
  • Asset managers and investment funds
  • Insurance companies other than pure property and casualty (general insurance) or pure term life entities
  • Trust companies
  • Other financial intermediaries (such as custodians and related service providers)
  • Credit unions and cooperatives


For this purpose, a non-U.S. entity is any entity that is not


  • A partnership, corporation, trust incorporated or created under U.S. law
  • A non-U.S.-incorporated entity having shareholding of 10% or more or ownership held by
  • An Individual who was born in the U.S. or is an U.S. citizen or an U.S. resident (including green card holder) or has an U.S. address, U.S. mailing address or U.S. in-care of or holds mail as a sole address
  • An U.S. incorporated entity as above described


Who qualifies as a U.S. person under FATCA?


A U.S. person is:


  • A citizen or resident of the United States (including a green card holder).
  • A partnership, corporation, estate, trust incorporated or created under U.S. law (U.S. incorporated entity)
  • A non-U.S.-incorporated entity having shareholding of 10% or more or ownership held by
  • An Individual who was born in the U.S. or is an U.S. citizen or an U.S. resident (including green card holder) or has an U.S. address, U.S. mailing address, U.S. in-care of or holds mail as a sole address
  • An U.S. incorporated entity as above described


How would you know if you are a U.S. person?


  • There are specific indicators that determine whether you are a U.S. person; these are:
  • US resident or Citizen
  • US Place of birth
  • US home or mailing address
  • only address is a US PO Box, c/o or hold mail address
  • Power of Attorney or signing authority having US address
  • A US telephone number
  • standing order to transfer funds to an account in the U.S.


What ought you to do?


To discover whether you are a U.S. person or entity, fill out our "Declaration of U.S. Status" form.


Any time your status in the United States changes, notify JMD Investment & Commodities Trading.


JMD Investment & Commodities Trading intends to meet all obligations imposed under FATCA in accordance with the Model 1 IGA Agreement, local banking, and tax regulations.


Additional Requirements: Form Required (together with the applicable FATCA Forms)


If you are an individual who is a U.S. person or a U.S. incorporated entity, you will be required to:


Submit a valid and completed FATCA 1A Form


About Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), https://www.irs.gov/forms-pubs/about-form-w-8-ben


Which clients are impacted?


Customers who possess cumulative deposit balances beyond a certain threshold are considered to be US persons or US entities.


DISCLAIMER


If you don't cooperate, what will happen?


We shall be obligated to report you as 'Recalcitrant' to the United States Inland Revenue Service via the Board of Inland Revenue in accordance with the reporting procedures provided for nations that have signed into a Model 1 IGA Agreement.


In light of the aforementioned, we urge you to comply with these requests. We also encourage you to seek advice from an independent tax advisor should you need assistance in understanding the scope of these new reporting requirements and the consequences of non-compliance.


Should you have any questions relating to the JMD Investment & Commodities Trading requirements, please contact our hotline or email via jmd@jmdtrade.com


For updates and further information on FATCA, please visit the IRS FATCA page at www.irs.gov/FATCA


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