Report Examines Effect Of FATCA On BVI Entities
by Mike Godfrey, Lowtax.net, Washington
07 November, 2014
International law firm Conyers Dill & Pearman has published a detailed article on the impact of the US Foreign Account Tax Compliance Act (FATCA) on British Virgin Islands entities, which also discusses equivalent legislation in the UK.
FATCA came into effect on July 1, 2014, and requires Foreign Financial Institutions (FFIs) to report information relevant for tax administration purposes about US persons' holdings in overseas financial accounts to US authorities. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
The report sets out the criteria for being considered an FFI and concludes that for the majority of BVI companies, which are not FFIs, it should be "business as usual".
It says that any BVI entity that is not an FFI – such as a typical BVI holding company – will be a non-financial foreign entity, or NFFE. Although NFFEs are not generally subject to registration or reporting requirements, they will still be required to self-certify their status to financial institutions with which they maintain financial accounts to avoid FATCA withholding, the firm said.
See all of today's news