Belize bankers meet with GOB to discuss new US requirement for bank disclosures

News coming out of the Ukraine today indicates that that country’s Cabinet has approved the draft of a Tax Information Exchange Agreement (TIEA) with Belize.

The Director-General of Belize’s International Financial Services Commission (IFSC) told Amandala that to date, Belize has in place 16 such agreements with other countries, the most recent one having been signed with Poland on May 16, 2013. He confirmed that Belize today received notification from Ukraine that they are ready to sign the new TIEA with that country.

Since 2009, Belize has signed TIEAs with Australia, United Kingdom, Belgium, Netherlands, Sweden, Finland, Greenland, Norway, Iceland, Denmark, Faroes, Portugal, France, Ireland, and Mexico.

The draft TIEAs with Italy and India, said Ghandi, are awaiting signature. Belize has sent a draft TIEA agreement to the United States government; however, talks on that proposal are still pending.

Belize also plans to sign TIEA’s with Canada and Georgia, another country near the Ukraine, shortly.

Ghandi said that the Organisation for Economic Co-operation and Development (OECD), an organization of 34 states, including the US, Canada, Mexico, and the UK, is asking all countries to sign these agreements for exchange of information and transparency.

Ghandi confirmed that such agreements include provisions under which governments undertake to share banking information and information on the owners of companies, their agents, as well as their nominal owners and authorized delegates.

The OECD believes their nationals hide their wealth in small countries. Once the TIEA is signed, Government issues a statutory instrument, which is laid before Parliament for acceptance.

Information disclosed under TIEAs could include details of banking transactions, and since the agreements are sanctioned by Parliament, banks can’t be sued for breach of confidentiality.

However, Ghandi explained that the agreements have little relevance for Belize, since Belize’s tax laws are territorial, and the Government of Belize only taxes within its jurisdiction.

Meanwhile, Ministry of Finance officials met today with representatives of the banking sector to discuss the United States’ new tax law — the Foreign Account Tax Compliance Act (FATCA), which calls on foreign banks doing business with persons of interest to the US, who should be paying taxes to the US Internal Revenue Service (IRS), to register with the IRS.

Full implementation is to take effect in 2014; however, Belizean bankers are calling on the Government of Belize to look into an alternative procedure whereby banks would not directly sign agreements with the IRS, but whereby they could provide the requested information under an intergovernmental agreement.

We understand that the local banks are concerned about the sovereignty and confidentiality issues, since the FATCA is a US law.

However, the US has indicated that non-compliant banks could face sanctions, including the withholding of assets overseas in the US – a matter which is of major concern to banks which rely on foreign banks in the US with whom they have correspondent banking relations, for international exchange of funds.