By Kiana Wilburg
The Guyana Revenue Authority (GRA) has hired international technology firm, Vizor Solution, to gather information on accounts held by US taxpayers at financial institutions (FIs). The company will also facilitate the production of an extract for transmission to the US Internal Revenue Service (IRS).
This move is in line with Guyana’s obligations under the Foreign Account Tax Compliance Act (FATCA).
The Foreign Account Tax Compliance Act requires Tax Authorities in countries with a signed Model 1 Intergovernmental Agreement (IGA) with the US, to report information to the IRS. Guyana signed its IGA with the USA on October 17, 2016.
Signed at the Ministry of Finance in Georgetown, the US-Guyana IGA allows for the exchange of banking and tax information for citizens residing in both countries as foreign nationals and required the Government of Guyana to amend Section 63 of the Financial Institutions Act, to designate GRA as the Competent Authority, on behalf of the Government of Guyana.
FIs are thus required to undertake certain due diligence and verification procedures to identify accounts held by US persons and report information on these accounts to the GRA which will, in turn, report the information to the IRS.
According to Vizor Software, the contract awarded by GRA is for its AEOI (Automatic Exchange of Information) Solution. The feature highlights of the Vizor AEOI solution include Financial Institution self-registration and account creation; Extensive validation of FATCA data; Configuration options for running in “fully automated” mode; and Management reports for monitoring, tracking and reviewing information within the system by the competent authority and automated exchange of information with the IRS.
Vizor Software is the global leader in cross-border information exchange solutions for Tax Authorities with over 15 jurisdictions having already implemented its solution to facilitate FATCA exchanges. The company notes that its proven software platform can be implemented in as little as five weeks and is continuously upgraded to ensure compliance with any future changes to the standards.
It has said that the extensive validation of all submitted data greatly reduces the administrative burden and risk for the Competent Authority.
FIGHT AGAINST OFFSHORE TAX EVASION
Guyana and the USA had signed the IGA as a commitment to fighting offshore tax evasion.
FATCA, which was enacted in 2010 by the US Congress, is designed to prevent tax fraud and evasion by US taxpayers using offshore banking facilities. It creates a new regime of automatic tax information sharing between financial institutions.
At the 2016 signing, Finance Minister, Winston Jordan, had said Guyana chose to be involved in this important venture not only because it will help to reduce tax evasion in the United States, but also, in Guyana, through the exchange of information between the two countries.
To fulfill the potential of FATCA to be a potent weapon in the fight against tax evasion and avoidance, the Finance Minister had said that Guyana would be required to undertake a number of measures to improve and strengthen its legislative and institutional arrangements.
“Thus, for example, Guyana amended Section 63 of the Financial Institutions ACT, Chap 85:03, Laws of Guyana, to designate the Guyana Revenue Authority as the competent Authority, on behalf of the Government of Guyana.
“This will allow Financial Institutions to provide the GRA with customer information on reportable accounts,” the economist said.
The Finance Minister said that the sharing of information across countries is important for the enforcement of domestic tax laws.
“By working together to increase transparency, both Guyana and the US will be able to detect and deter abuse of the tax system in both countries. This will enable better accountability within the global financial sector. The FATCA Agreement represents another step in our countries’ cooperation with each other, in order to combat money laundering and tax evasion and avoidance.”
Jordan continued, “Improving financial regulation and cooperation with international regulators has become an urgent priority in recent years, as the loss of correspondent banking relationships, due to de-risking, has put pressure on financial institutions in Guyana and the rest of the Caribbean region.”
He added, “Healthy correspondent banking relationships are essential because they facilitate trade, foster economic growth; create legitimate avenues for growing remittances and providing access to financial services.”
The Finance Minister had said that the adverse effects of de-risking on international trade, financial stability and growth, and money transfers (including remittances) have already been felt in many countries.
He said that if de-risking continues unchecked, all Caribbean states can expect to experience some level of macroeconomic instability, financial exclusion and, ultimately, economic collapse.
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