WASHINGTON, DC – The Foreign Account Tax Compliance Act (FATCA) and the Food Safety Modernization Act (FSMA) were the main issues that CARICOM Ambassadors to Washington DC discussed when they met with representatives of the US Department of State.
This meeting was scheduled at the express request of the White House following a meeting with President Obama and the heads of state of CARICOM in Cartagena de las Indias, Colombia during the Sixth Summit of the Americas.
CARICOM heads requested that their Ambassadors in Washington be briefed on FATCA which has the potential to have serious deleterious consequences for the region.
Ambassadors in Washington were briefed on the FSMA by analysts from the US Food and Drug Administration (FDA) whilst representatives from the Treasury Department and the Financial Action Task Force (FATF) dealt with FATCA.
The FSMA was signed into law by Pres. Obama on January 4 and enables the FDA to better protect public health by strengthening the food safety system. Ambassador Parsan expressed concern that the Act would place undue strain on the personnel and resources of suppliers as they would be required to undergo a still unclear certification process in order for their products to be granted entry into the USA.
FDA representatives assured the Ambassador that the purpose of FSMA was not to make the process of food importation cumbersome but rather to ensure that US citizens are provided with safe food. They did, however, concede that the Act is still in its initial stage. They also agreed that many deadlines that were initially set for compliance by states would have to be extended.
Dr. Parsan made the suggestion that mechanisms for information dissemination, training and development, and third-party certification be instituted for the Caribbean. He further suggested the multi-year grant mechanism available to US food producers and technical cooperation agreements be considered for Caribbean food producers.
To further assist Caribbean food producers, the Trinidad and Tobago Ambassador suggested that the FDA consider locating an office and accredited laboratory for food safety inspection in the Caribbean.
Treasury officials took advantage of the opportunity to brief Ambassadors on the Foreign Account Tax Compliance Act. They highlighted that the overarching purpose of the Act is to ensure that U.S. persons with financial assets overseas are declaring their income.
Under the FATCA, Foreign Financial Institutions (FFIs) will be required to identify to the US Internal Revenue Service (IRS) US citizens that are holding any savings in excess of US$50,000 or withhold 30% of the interest, dividend and investment payments due to those clients and send that money over to the IRS. FFIs that fail to comply would face bills for taxes due, and heightened scrutiny by the IRS.
The Policy Advisor at the US Treasury insisted that no country is exempt from FATCA’s compliance requirements and that the US has entered into reciprocal agreements with France, Germany, Italy, Spain and the United Kingdom.
CARICOM Ambassadors questioned the effect of FATCA on remittances, double taxation treaties and the sovereignty of states in general.
Officials assured the Ambassadors that remittances would not be subject to the FATCA and that it was not the goal of the Treasury to threaten the sovereignty of states but rather to ensure that US citizens are not provided with tax havens.
