Guyana, USA sign tax evasion agreement

Oct 18, 2016 News

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By Kiana Wilburg
Guyana and the United States yesterday formally committed to the fight against offshore tax evasion with the signing of an agreement to implement the Foreign Account Tax Compliance Act (FATCA). Minister of Finance, Winston Jordan and US Ambassador to Guyana, Perry Holloway were the signatories.

The ceremony took place at the Boardroom of the Ministry of Finance, in the presence of the Commissioner-General of the Guyana Revenue Authority (GRA) Godfrey Statia.
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.
The Act also requests foreign financial institutions to identify and report information about accounts held by US taxpayers in their jurisdictions.
Furthermore, FACTA is part of a global movement towards Automatic Exchange of Information (AEIO) of non-resident financial account data among tax authorities.
AEIO has the potential to increase transparency, cooperation and accountability among financial institutions, and encourage tax payers to voluntarily disclose all relevant information to tax authorities.
In his address to the media, Ambassador Holloway said that Guyana and the US have been working together on the agreement for the past two years and in many ways, is formalising what has been going on all along.
The diplomat asserted that the United States welcomes Guyana’s movements towards ensuring international tax compliance. He said that the agreement is a symbol of both countries’ commitment to work collaboratively towards combating offshore tax evasion; an objective which he said will have mutual benefits.
Finance Minister Winston Jordan agreed with the sentiments shared by Holloway, adding that the event is a significant and historic one for Guyana. Jordan said that the signing of the agreement to implement the Foreign Account Tax Compliance Act represents both the culmination of a long travelled road and the beginning of a new phase in the Guyana/United States cooperation in tax and anti-money laundering matters.
Jordan said that 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 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 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 of our 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.
Jordan said that the implementation of FACTA is only one aspect of Guyana’s recent efforts to strengthen the regulation of its financial sector. He reminded that this year, Guyana undertook a National Risk Assessment in order to allow a more pro-active approach to address Money Laundering and Terrorist Financing.
Jordan said that the results of this exercise “will allow us to examine to what extent Guyana is compliant with the Financial Action Task Force (FATF) recommendations”.
Further, the economist said that numerous studies, reports and high level meetings with organisations such as the IMF, World Bank, United Nations and the Commonwealth Secretariat have been undertaken.
Additionally, Guyana also has a pre-existing Tax Information Arrangement (TIEA) with the US Government that imposes an income tax arrangement.
In this regard, the Finance Minister said, “We are not unaware of the onerous burden and the great financial and human costs placed upon us to meet the requirements of the organisations imposing the new regulations. We will require technical and other forms of assistance, if these regulations are to be implemented in a timely and effective manner”.
The Finance Minister said that Guyana supports all initiatives that will build domestic and global financial sectors, including the sharing of tax information.
He said that Guyana looks forward to continued fraternal relations with the US, not only on the issue of taxation, but also on other social and economic issues, as the Government moves to stamp out corruption, money laundering, and the illegal trade of drugs across the globe.

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