The Opposition is entering this morning’s meeting with the Bankers’ Association (BATT) on the FATCA legislation with an open mind, says Opposition Senator Gerald Ramdeen. However, he added, they now have concerns about amendments Government made to the legislation last week.
Ramdeen spoke on the eve of the meeting which BATT sought with the Opposition following non passage of the legislation last week.
The legislation seeks to effect an inter-governmental agreement approved in 2014 by the former People’s Partnership (PP) administration with the United States regarding tax information exchange. This is to avoid US tax evasion.
The law will enable local institutions to report to the US Internal Revenue Service (IRS) on the accounts held by US clients. Government has said failure to comply means local financial institutions and US citizens will suffer a withholding tax of 30 per cent applied to all US-sourced income.
Non-compliance will also halt on-line financial transactions with the US, including remittance, affecting banking and T&T’s economy. The legislation which must be approved by February 2017 and requires at least three Opposition votes for passage.
The Opposition stayed away from last Monday’s debate on the legislation, stressing that FATCA should be subjected to deeper Joint Select Committee scrutiny. Government continued proceedings, deleting several clauses the Opposition had objected to. Deliberations halted at the vote since the Opposition was absent. Proceedings will resume January 6.
Business groups, who have urged both sides to pass the legislation, have particularly pitched to the Opposition. BATT president Anya Schnoor, stressing the legislation “must be passed,” underscored T&T’s reputational risk and repercussions if FATCA compliance remains unfulfilled.
Opposition Leader Kamla Persad-Bissessar, who is attending a conference in London, will not be at today’s meeting with BATT. Instead, UNC MPs Bhoe Tewarie, Suruj Rambachan, David Lee, Rodney Charles, along with Senator Ramdeen and others will meet BATT for the 10 am meeting at the Office of the Opposition Leader, Charles Street, Port-of-Spain office.
Ramdeen said: “We hold an open mind, but there are also concerns about certain amendments to the legislation which Government proposed recently. If enacted, these could conflict with the agreement between T&T and the US.”
Ramdeen said one area was last Monday’s amendment on a clause that gives the Finance Minister power as the competent authority to handle the tax information exchange. Government, noting Opposition concerns about this, proposed the Board of Inland Revenue (BIR) as the competent authority.
However, Ramdeen said the T&T/US agreement had stated the minister would be the “competent authority” and changing it to the BIR would push the legislation out of sync with the agreement.
While conceding the amendment was made because the Opposition had concerns about the clause, Ramdeen explained: “Our point is, before these amendments are passed into law they should be agreed to by the US since the legislation shouldn’t be different to the agreement.
“Supposed the US doesn’t want the BIR to be the competent authority? Government should be talking to the US first on this before we pass amendments. We can’t pass bad law just to pass something.
“Our research also shows mechanisms that need to be implemented before this is passed by Parliament haven’t been implemented. An agreement regarding the competent authority, proposed as the BIR, has to be signed and that’s not done yet.”
Ramdeen added: “The Opposition Leader indicated very early, that Facta required JSC scrutiny. We continue to hold this view as its effects are far-reaching. Stakeholders should have an opportunity to express views and understand its impact.
“We don’t hold the view the financial system will crash if this isn’t enacted. It’s clear when one reads section 14( 71) of the US IRS code this won’t occur and the 30 per cent withholding tax would be imposed on income earned in the US by US citizens. The banks won’t be subject to the tax, it will apply to US citizens.”
Last Saturday, Attorney General Faris Al-Rawi repeated that there is no need for a JSC.