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The Foreign Accounts Tax Compliance Act (FATCA) will put pressure on offshore companies seeking to do business in the Caribbean, says Barbados Prime Minister Freundel Stuart.
FATCA requires foreign financial institutions (FFIs) to register with US tax authorities and report information on accounts housing the assets of US taxpayers. Failure by an FFI to sign an agreement with the Internal Revenue Service (IRS) and disclose information would result in a requirement, from next year, to withhold 30 percent tax on US-source income.
Addressing media at the close of the 34th regular conference of Caribbean Community (CARICOM) heads of state, Stuart said: "This is another line of attack on our international business services sector. Understand that the reason we have an international financial and business sector is because companies take the decision that it would be more advantageous to conduct their business from abroad from a tax point of view than to do business at home where the tax base may be higher."
He noted that tax avoidance is not against the law and companies can legitimately operate outside of their jurisdictions.
He complained that the OECD countries put too much pressure on offshore jurisdictions with endless new requirements.
"Recall too, that the prime minister of the United Kingdom, David Cameron, said that at the G8 Summit in Ireland, the principle agenda item was the offshore sector and the fact that their countries are leaking revenue because the people who should be paying taxes onshore are paying taxes at a lower rate offshore," the prime minister said.
Stuart stressed that CARICOM members should work together for the good of the region rather than seek their individual interests.
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