By Kiana WilburgTwo weeks ago, I shared with you, extracts of my interview with Chartered Accountant Shawn Naughton, on the importance of the Foreign Account Tax Compliance Act (FATCA) and how Guyana stands to benefit from getting on board. But as it is with everything, there are advantages and disadvantages, and in our discussion, Naughton and I examined both sides of the spectrum.For those who missed the first edition, FATCA is an international tax tool for improving compliance by US taxpayers with the tax laws of the USA. The US tax laws provide that all its citizens and resident taxpayers are to be taxed on their worldwide income.In that edition, Naughton addressed some key issues, expounding on the effect FATCA would have on Guyana and concerns about FATCA as it relates to Guyana. (See the following link for more details: http://www.kaieteurnewsonline.com/2016/03/06/can-guyana-checkmate-tax-evasion-with-fatca/)Today, we look at Guyana’s ability to receive information about its elusive taxpayers through this programme, and what is required of Guyana in order to be eligible for it.?Kaieteur News (KN): From what you have said,Jerseys NFL Wholesale, the residence of a taxpayer is important in deciding which country has the right to tax a person.?? Please clarify how this works.?Chartered Accountant,Cheap NBA Jerseys China, Shawn NaughtonShawn Naughton (SN): The question of taxing rights is a sovereign issue and must be provided for via the domestic tax laws of a country. It is however true that the tax-residence of a person and the place in which he earns his income are the two most common factors determining which country has the right to tax that income.Guyana’s tax laws provide that all income earned in Guyana should be taxed in Guyana. This is commonly referred to as “source taxing rights” (the right to tax income sourced in that country).?? Virtually all countries agree that if income is earned in that country it should be taxed there, so they have included this rule in their tax laws.Taxing rights based on a taxpayers’ residence and/or citizenship is a secondary taxing right.?? What this means is, should a taxpayer earn income in one country but is a resident or a citizen of another country he may be subjected to “taxing-up” in the second country.The first country would have priority rights to tax (source taxing rights) and the second taxing-up rights. As an example, if you are a citizen of the USA but earn salary in Guyana of $2,Wholesale NFL Jerseys,000,NHL Jerseys From China, Guyana will tax the $2,000 (since the money was sourced here). USA would tax the same $2,Wholesale Jerseys From China,000 because you are a US citizen.? If the Guyana tax on the $2,000 turns out to be say $500 and US tax $600,? USA will tax-up ($600-$500=$100 which should be paid to USA).?? Effectively the USA has given relief for the Guyana tax paid (called double tax relief) since the $2,000 income was taxed twice (once by Guyana and again by the USA). Note that Guyana’s tax laws also provide for double tax relief.If a company which is subject to source taxing in Guyana (because it operates here) is offered a period of ‘no tax’, whether or not it makes a profit during that period, the company could end up being taxed in full in its country of residence, since there is no tax paid in Guyana to relieve.Continuing with the example,Cheap Jerseys 2018, the US tax would be $600-$0=$600 since Guyana waved its rights to tax.?? Simply stated, in many cases the company would not end up getting a tax waiver or exemption, as a result of foreign tax paid, and Guyana would lose the tax revenue.Care should therefore be taken when offering tax waivers to companies.KN: Is determining residence difficult??? How is it determined??SN: Well first let me explain that the USA is one of only a few countries to tax based on citizenship. In the USA, citizenship for taxing purposes is based on the country’s immigration law definition of a citizen.Tax-residence is however a term defined by tax law. The residence of an individual is usually based on that individual’s presence in a country. The individual’s connections to the country may need to be considered, in addition to presence, where presence alone cannot establish residence.A company’s country of residence is usually where it was incorporated and/or where it is managed.?? In Guyana, a company is resident where it is managed and controlled.?? Given this definition, a company could have been incorporated and operating in Barbados, but be Guyana resident for tax purposes.This fact has implications for Guyanese taxpayers who may register a company in say, Delaw