We are now living in the world of Fatca, says Minister Laporte |15 September 2014

“The world has changed. We are now living in the world of Fatca.”
Finance, Trade and Investment Minister Pierre Laporte said this during the recent networking event on Global Tax Transparency and Fatca (Foreign Account Tax Compliance Act) organised by Amicorp Group at the Savoy Seychelles Resort & Spa.

Minister Laporte was explaining to the forum the different steps Seychelles has already taken to comply with the Organisation for Economic Cooperation and Development’s (OECD) statement during the November Global Forum on Transparency and Exchange of Information for Tax Purposes when the organisation said the country was among five states that either failed to share taxpayer details with other countries or to gather information on beneficial ownership of corporate entities registered on their territory.

The event discussed the importance of internationally compliant and transparent structures which are in line with changing regulations worldwide and focused on the challenges that offshore financial service centres like Seychelles face in today’s economic environment and what strategic changes they should look to implement.

Fatca requires financial institutions to use enhanced due diligence procedures to identify US persons who have invested in either non-US financial accounts or non-US entities. The intent behind Fatca is to keep US persons from hiding income and assets overseas.

Speaking to the press, Minister Laporte said under the Fatca law, countries like Seychelles especially those with financial and offshore centres, are almost obliged to join this initiative. And to be able to do this the country has to sign an agreement with the United States’ authority to this regard. And under this agreement there are rules and regulations a country has to abide to when dealing in offshore services. This means that the tax authorities of both the US (American Internal Revenue Service) and Seychelles (Seychelles Revenue Commission) will be able to share information based on the Fatca law.

Is Fatca a disadvantage or an advantage for Seychelles?

“It depends on how you look at it,” said Minister Laporte.
“It is a disadvantage if we consider that our offshore sector is getting many clients due to our more favorable tax system than the US one. If the clients who are using our offshore sector will now have to report to the United States’ authority, those who were not complying with the tax laws will see Fatca as a disadvantage,” said the minister.

He added: “On the other side there are many businesses that use the Seychelles offshore sector not necessarily to avoid paying taxes in their countries but because our tax system is better.”

“But at the end of the day it will bring more transparency in the international financial sector. It will stop the practice of tax evasion by some people. So for Seychelles it’s both an advantage and a disadvantage because on one side we will have fewer clients while on the other side we will have serious and honest ones,” said Minister Laporte.

He said the country has always pointed out that it does not want to have an offshore sector with dishonest clients or those who are involved in money laundering. Though we get fewer clients we will get honest ones and it will make our offshore sector a clean and credible one, explained Minister Laporte.

The minister also warned that the people involved in the Seychelles offshore services will be faced with more challenges and more work as they will now have to make sure the information that were not necessarily being provided before to the authority will need to be given so that the clients who come to them stay and are clean and honest.

By M. Julie