On November 29 the United States signed agreements with the Cayman Islands and Costa Rica to implement the Foreign Account Tax Compliance Act (FATCA). The bilateral pacts are the first FATCA agreements in the Caribbean and Central America.
“Today’s announcement marks a milestone in the effort to promote global tax transparency,” said International Tax Affairs, Robert B. Stack. “These agreements underscore growing international cooperation in the effort to end tax evasion everywhere.”
Caribbean and Central American havens are often thought to be less than thorough in their observance of banking and tax laws.
The signing of Intergovernmental Agreements (IGAs) with the Cayman Islands and Costa Rica was quietly enacted in 2010 in a bill – the Hiring Incentives to Restore Employment Act of 2010.
FATCA collects information on accounts held by U.S. taxpayers abroad. It requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) that do not agree to identify and report information on U.S. account holders.
The Costa Rica IGA here is a Model 1A agreement, means the U.S. will also provide tax information to the Costa Rican government regarding Costa Rican individuals with accounts in the United States.
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