Barbados has become the latest territory to sign up to the Foreign Account Tax Compliance Act, which was rolled out by the US government in July.

Barbados has become the latest territory to sign up to the Foreign Account Tax Compliance Act, which was rolled out by the US government in July.

The agreement was signed by minister of industry and international business Donville Inniss and co-initialled by Ambassador to Barbados, Dr Larry Palmer, at the US Embassy in Barbados.

The news follows the announcement in May that Barbados had reached an agreement in substance with the US.

“The signature of this FATCA agreement represents one of the salient pillars in the transformation of how we as an international business and financial services centre interact not only with other jurisdictions on the sharing of vital information, but is an indication of the transformation of how we interact with our clients and apply greater due diligence in an ever-changing environment,” said Inniss.

FATCA came into force on July 1 and requires all financial institutions outside of the US to regularly submit information on financial accounts held by American citizens to the US Internal Revenue Service. Those who are not compliant will suffer a 30 per cent withholding tax on income and gross proceeds, as of January 2015.

Inniss said that the signing was not a deviation from Government’s belief that “businesses and investment must be allowed the flexibility to thrive”.

“However, it must do so in an environment not fraught with uncertainty and arbitrary regulation. This agreement therefore seeks to strengthen this regulatory framework,” he said.

Palmer welcomed Barbados’ commitment to intensifying its cooperation with the US to improve international tax compliance, and hailed the signing as “a significant step forward in efforts to work collaboratively to combat offshore tax evasion”.

“FATCA introduces reporting requirements for foreign financial institutions with respect to certain accounts held by US taxpayers. Because access to information from other countries is critically important to the full and fair enforcement of domestic tax laws, information exchange is a top priority for the US,” said Palmer.