The British Virgin Islands FATCA deadline for compliance has been extended by order of the ministry of finance.
According to a press release from the British Virgin Island International Tax Authority, the government “has also decided to take a relaxed approach towards the enforcement of these deadlines,” in response to requests from financial institutions seeking additional time to comply with due diligence policies with their customers.
The British Virgin Islands FATCA deadline for registration moved from June 1 to June 30, and the deadline for reporting moved from June 30 to July 31.
General FATCA compliance isn’t set for any major reversal in the British Virgin Islands though, with the tax authority saying that the relaxed approach to enforcement only applies for 2015.
FATCA was made law in 2010 and went live in January 2015 with its International Data Exchange Service, which links tax authorities in 110 countries and more than 145,000 financial institutions with the IRS to ensure that individuals and institutions are compliant with FATCA and not dodging their U.S. tax obligations.
Banks must comply with IRS rules under FATCA, which means either reporting account information on American clients or signing a statement to the IRS that states they have no U.S. clients. Noncompliant banks will see a 30% withholding on U.S.-dollar wires to their bank. The law has caused many international institutions to simply close any American-held accounts and not take new American clients.
The United States is the only developed country that collects taxes based on citizenship instead of residency. The only other countries—developed or not—to tax nonresident citizens based on worldwide income are Eritrea and China.
As the IRS tightens its restrictions on offshore banking by Americans, more and more Americans are renouncing their citizenship. According to the Treasury Department, 3,415 Americans renounced their citizenship in 2014, up from 2,999 in 2013.