DATE: June 30, 2014 NO. 48/2014
Grenada and the United States of America Reach Agreement on FATCA
ST. GEORGE’S, GRENADA, Monday, June 30, 2014: The Government of Grenada has reached an agreement with the United States (US) on the terms of an Inter- Governmental Agreement under the Foreign Account Tax Compliance Act (FATCA).
On March 18th, 2010, the US Government enacted FATCA to combat tax evasion by specified US citizensholding investments in accounts outside of the United States, specifically as it relates to US-sourced income. FATCA requires Foreign Financial Institutions (FFIs) to report to the US Internal Revenue Service (IRS), information on assets of US$50,000 or more held by US taxpayers, or by foreign entities in which US taxpayers hold substantial ownership interest.
On June 16th, 2014, Grenada successfully completed the negotiation of a Model 1 Inter-Government Agreement to enable FATCA compliance. This model requires financial institutions to submit customer information to the Inland Revenue Department for onward submission to the IRS.
Grenada intends to pass the “Foreign Account Tax Compliance (United States) Implementation and Enforcement Bill”, to provide for the legal submission of customer information for the purposes of FATCA.
Failure of a FFI to submit information could result in a 30% withholding tax levied on specific income originating from sources in the US and may result in the potential loss of correspondent banking relationships. As such, Government is committed to ensuring that the required structures are in place to facilitate the requirements of FATCA while preventing the imposition of the withholding tax on the local financial institutions.