More than a year has passed since the U.S. began the foreign implementation phase of its controversial Foreign Account Tax Compliance Act (FATCA). The financial news media has dedicated considerable resources to covering this topic, and its coverage has often been a bit ominous for offshore bank account holders. The Belize banking industry is taking a much more rational approach to this matter in regard to compliance.
Understanding FATCA and Offshore Funds
In essence, FATCA is a measure that the U.S. hopes will ameliorate compliance by American taxpayers who have international bank accounts. The law was passed in 2010; however, implementation did not begin in earnest until 2013.
The banking industry in Belize has been conducting FATCA compliance reviews of client accounts since late 2103. For most banks, the review is a two-stage process. The initial review stage is conducted to determine if the account holder is an American taxpayer. In some cases, ownership or control of 10 percent or more of the assets in a business account may indicate the need for further FATCA compliance.
A common misconception about FATCA is that it only affects U.S. passport holders. In fact, U.S. residents and even some individuals who may have been issued a taxpayer identification number from the IRS may also be impacted by FATCA.
Should a Belize bank account associated with an American taxpayer require further FATCA compliance, the bank will assist the account holder in filling out the required paperwork. It is important to understand that FATCA is mostly a matter of disclosure. All other aspects of bank secrecy, which makes Belize a smart choice for offshore banking, are not affected by FATCA. In other words, offshore money deposited in Belize will remain safe.
Banking and Asset Management in Belize After FATCA
Contrary to what some alarmist financial news media outlets have claimed, FATCA is not a means to an inauspicious end for the offshore banking industry. Foreigners who seek to open international bank accounts in Belize mostly do so with the intention of keeping their offshore funds safe. FATCA will not change this intrinsic aspect of offshore banking.
Asset management and expert advice are two important aspects of banking that attract many foreigners to Belize. To this end, FATCA has triggered many questions among foreign account holders and expats as to how they can better manage their funds with regard to American taxation. Luckily for these individuals, Belizean banks tend to be connected with attorneys and financial professionals who can provide expert advice in this regard. FATCA is not as heavy-handed of a rule as some alarmists make it out to be. There are certain exclusions and deductions that may keep foreign income and offshore assets from being taxed by the IRS. To this end, financial professionals in Belize are monitoring the situation and getting ready to help those who may be impacted by FATCA.
In the end, FATCA does not spell the end of offshore banking by any means. An international bank account in Belize is still a good strategy to keep offshore money safe within reason.