Foreign Account Tax Compliance Act

The Foreign Account Tax Compliance Act (FATCA) was introduced by the United States of America (US) and became law as part of the Hiring Incentives to Restore Employment Act in March 2010. Its aim is to prevent U.S. taxpayers from using accounts held outside of the U.S. to evade taxes. FATCA and, in some countries, related local regulations will require financial institutions to report annually on specified accounts held outside of the U.S. by U.S. taxpayers. This reporting will be made available to the U.S. Internal Revenue Service either directly or through local regulatory agencies.

Any financial institution that fails to comply with FATCA will face a 30% withholding tax on a wide range of U.S. sourced payments to its clients. In addition, countries that pass regulations supporting FATCA will enforce those regulations through their own regulatory agencies. To this end, it requires Financial Institutions (FIs) such as the Fortress Group to provide information annually on US accounts which it holds to the US Internal Revenue Service (IRS) via a local competent authority.

 

The Common Reporting Standard (CRS)

The Organization for Economic Cooperation and Development (OECD) developed the Common Reporting Standard (CRS) in response to the G20 request for jurisdictions to obtain information from Financial Institutions and to automatically exchange that information with other jurisdictions on an annual basis. The CRS, based on FATCA, is being adopted by a large and growing number of countries including most Caribbean jurisdictions. The purpose of CRS is to enable tax authorities to obtain information pertaining to the financial assets held by their citizens in foreign or overseas financial institutions, thereby greatly strengthening global tax compliance.

It requires the Fortress Group to collect information from individuals and entities to establish their tax residency. Depending on the account holder’s tax residency, Fortress may also be required to report financial account details to the relevant tax authorities.

In Barbados, the Barbados Revenue Authority (BRA) was appointed as the competent authority for the purpose of FATCA and CRS reporting. All reporting financial institutions within Barbados are required to provide the BRA with the required account information on qualified persons for the purpose of FATCA and CRS reporting. The BRA would forward information received on the reportable accounts and submit the same to the relevant tax authorities.

 How does this affect our clients?

• Onboarding & self-certification: All new clients must complete FATCA/CRS self-certification forms, confirming your tax residency, citizenship, and providing TINs where applicable.
• Ongoing updates: Should your status change, e.g., you become a U.S. citizen or move residency, you must inform us to ensure your records remain accurate and up to date. This helps us meet our reporting obligations accurately.
• Privacy assurance: Fortress remains committed to preserving its customer information in the strictest manner. We collect only legally required information and report only as mandated. Your personal data is securely managed in compliance with the relevant data protection laws and guidelines.

It is also important to note that the Fortress Group is not required to obtain customer consent prior to meeting its reporting obligations under FATCA and CRS.

Why does this matter?

These reporting frameworks are part of a global effort to increase tax transparency and combat cross-border tax evasion. By complying, we protect you and ourselves, ensuring lawful operations, avoiding penalties, and maintaining access to international banking and investment networks.

Where can I get more information?

For further information on FATCA, please click here.
For further information on CRS, please click here.
We will also keep you informed by posting updated information on our website.