Who Will Be Affected by FATCA?
Financial Institutions and Non Financial Entities
The FACTA provides for automatic withholding tax of thirty percent (30%) of all payments due, from US source income, including the gross proceeds of certain sales. to non-compliant FFIs and NFEs.
Such payments include:
- Interest (including IOD)
- Profits and Income
- Salaries and wages
- Sale or disposition of property that can produce dividends and interest.
- Sale of stock (on gross proceeds even when there is no gain)
- Any other fixed or periodical gains, profit or income which stems from sources within the US.
To avoid this automatic withholding penalty, FFIs and NFEs can sign up with the IRS to provide information on applicable financial accounts with US Indicia. When financial institutions decide to become partners they are expected to:
- Collect relevant information on all accounts holders ( to determine which are owned by US citizens)
- Comply with verification and due diligence procedures
- Report on US account holders
- Comply with reporting requests
Some categories of FFIs are exempted from FATCA requirements. These include:
- Most Government entities
- Most non-profit organisations
- Certain small, local financial firms
- Certain retirement entities
FATCA Reporting Times
FATCA reporting in Saint Lucia will commence in 2016. The Table below shows the reporting times and the information that needs to be provided for the next three (3) years and onwards.