Home' Trinidad and Tobago Guardian : August 1st 2013 Contents AUGUST 2013 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
Zia Paton, director of advisory at Pricewaterhouse-
Coopers, says local companies should not use the
extension to the deadline for start of Foreign Account
Tax Compliance Act (FATCA) as a reason to delay
steps being taken to become FATCA compliant.
"It is just a six-month extension on the previous deadline that
the regulations had stipulated. For example, the deadline to be on
the first list published by the IRS has moved from October 25 to
April 25, 2014. It gives our local financial institutions a little bit
more time to get ready but six months is not a very long time espe-
cially for those organisations that have not yet started work on
assessing their ability to be FATCA compliant," she told the Business
Guardian on Monday.
The US Treasury announced on July 12, that due to overwhelming
concern from countries around the world, the implementation of
FATCA would be deferred from January 1, 2014 to June 30, 2014.
Paton added: "I do not think anyone should look at the extension
as a reason to move FATCA down their priority list if they want
to become compliant," she said.
She also said that companies have begun the process of under-
standing the FATCA legislation.
"From what I gathered at the T&T Chamber meeting a few
weeks ago, a number of businesses have started to understand
FATCA and are definitely sensitised as to what is required. There
are local organisations that have made significant strides in assessing
the requirements of FATCA compliance and are moving to imple-
mentation. There are other local financial institutions, however,
that are not that far advanced."
Paton said that the slow movement by some local companies
could be attributed to the fact that the US IRS is still working to
provide clear guidance and interpretation on a number of issues
and the extension to the deadline highlights the complexity of
imposing extra-jurisdictional legislation. It also gives both the IRS
and non-US financial institutions more time to get ready.
"The registration portal is not yet ready. The initial target date
for the opening of the portal was July 15. The new deadline for
the portal is August 19 for companies to begin registration. The
extension gives the IRS time to provide forms, guidance and clar-
ification on a number of aspects of the registration that are still
The Central Bank told the Business Guardian on Monday that
it welcomes the extension of the starting date for FATCA.
"FATCA is a new development and the implementation require-
ments are time consuming. The six-month extension is therefore
good news," a statement from the bank said.
Debate on legislation
Robert Trestrail, senior vice president, T&T Chamber of Com-
merce, said the FATCA legislation has generated "heated debate."
"The bill has been severely criticised internationally. Here in
T&T and the wider Caribbean region, some of the initial criticisms
of the FATCA regime have been that it does not respect sovereign
financial laws, it may do damage to the reputation of our financial
sector and it adds an additional burden of compliance on the local
financial sector which is unrelated to its operations," he said.
He said, under this legislation, the United States is demanding
that all non-US financial institutions including banks, insurance
companies, collective investment schemes and credit unions, enter
into an agreement in which they undertake to identify customers
who are subject to the American tax system, and provide their
names and financial data to the IRS.
He also said these issues are being addressed at a government-
to-government level and it is important for T&T to retain its com-
petitiveness as the "economic tiger" of the region.
"Realistically, if we wish to position ourselves as the financial
tiger of the English-speaking Caribbean, we will be required to
comply with such legislation. Refusal to comply is only theoretical,
financial intermediaries who are deemed non-compliant face huge
fines, and face being blacklisted internationally."
Janelle Bernard, representative of the Bankers Association of
T&T (BATT), two Fridays ago at the T&T Chamber of Commerce
seminar on FATCA, said companies complying would require
widespread changes in the way they do things.
She said there is wide-ranging and costly technological changes
to ensure that the requisite customer information is captured.
"There will be process and procedure changes, for example, to
the onboarding process to facilitate the securing of a customer s
consent to disclose information and withhold payments. High
compliance cost prohibitive to those smaller financial services
entities seeking to be compliant; anticipate a high level of non
compliance," she said.
The consequences of not complying would be difficult, she
"There is the 30 per cent withholding on US-sourced payments.
Also, doing business with non-compliant financial institutions
will become difficult. Banking relationships can be terminated.
There is the increased risk of international sanction due to high
level of non-compliance country wide and resultant reputational
risk to the country. International trading relationships will be
affected, correspondent banking services disrupted or terminated,
for example international trade settlements and payments. The
country will be placed at a competitive disadvantage such as dis-
incentive to foreign investment."
According to IRS Notice 2013-4, this additional time is to revise
timelines for implementation of FATCA and provide additional
guidance concerning the treatment of Foreign Financial Institutions
(FFI) whose countries have signed an Inter-Governmental Agreement
(IGA) or where the US Treasury will treat the country as if they
The US Department of the Treasury and the Internal Revenue
Service said that "due to overwhelming interest from countries
around the world, a six-month extension to the start of the FATCA
withholding and account due diligence requirements will be provided
to allow more time to complete agreements with foreign jurisdic-
The Treasury Department said the six-month extension, to July
1, 2014, will also provide Caribbean and other FFIs with "the time
necessary to comply with FATCA while helping to ensure efficient
implementation of the law.
Treasury Deputy Assistant Secretary for International Tax Affair,
Robert Stack in a statement said the number of countries this leg-
islation will affect, warrants the extension deadline.
"Given the groundswell of international interest in FATCA, we
are providing an additional six months to complete agreements
with countries and jurisdictions across the globe, before withholding
begins. The high volume of international participation in this effort
represents a quintessential race to the top," he said.
no reason for
A warning from the Governor of the Central Bank
that the planned shutdown of one of bpTT s largest
natural gas facilities along with planned shutdowns
by several plants on the Point Lisas Industrial Estate
in September could lead to a curtailment of growth
in the 2012/2013 fiscal year.
In an interview on Tuesday, Jwala Rambarran told
the Business Guardian, "It all depends how deep the
shutdown is. We are not sure, at this stage, but it
has the potential to derail the projected economic
BPTT has announced that, as its last major main-
tenance upgrade, it will be taking offline its Cassia
B field and this has led to several downstream com-
panies doing a turnaround of its plants because of
the gas curtailment expected with the upgrade.
Over the last two years, bpTT has been involved
in major upgrade of its offshore facilities following
its mandate to improve its worldwide safety in the
wake of the April 2010 disaster in the Gulf of Mexico.
As part of that upgrade, it will shut down its Cassia
B facilities and this is expected to lead to a significant
reduction in production.
Rambarran said the economy had grown for the
first half of the fiscal year but the real challenge will
arrive in September. He told the Business Guardian
that the Central Bank will be meeting with bpTT in
an effort to understand the full impact of the shutdown
on the economy.
He said the bank had also seen both oil and gas
prices being significantly higher than those projected
in the budget but noted that the Finance Minister
was unlikely to receive a windfall due to lower pro-
"The production figures will be important because
they are lower than were projected in the budget.
Crude production is lower relative to 2012 and it s
only in 2013 are we seeing LNG production surpass
what happened last year so I think production will
certainly be an issue."
The Ministry of Energy has shown that Calypso
Crude which is the mix of Petrotrin s land crude, its
Trinmar crude and those from farmouts and lease
operators averaged US$89.92 for the last eight months
while BHP Billiton s crude, which is just over 10,000
barrels a day fetched an average price of US$110.10.
BPTT s light Galeota crude averaged US $111.04.
Energy economist Gregory McGuire said he expect-
ed the Finance Minister to also achieve his targets
with LNG prices being particularly strong in Asia.
Like the Governor of the Central Bank he remains
concern about the impact of lower production on
the overall health of the corporation sole.
McGuire also said the final receipts will also be
impacted by the extent to which oil and gas companies
will be able to claim tax credits for money spend on
exploration and development activities.
"There has been some activity on the E&P side of
the business and in that respect one has to always
be weary of what the final figures may look like,"
He expects revenues that exceed what was budgeted
will go in the Heritage and Stabilisation Fund as is
called for in the act.
In presenting his 2012/2013 the Finance Minister
said his estimates of revenue were based on an oil
price of US $75 a barrel and natural gas prices of US
$2.75 per mcf.
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