Guernsey has signed an inter-government agreement with the US Government for the Foreign Account Tax Compliance Act (Fatca).

The act requires US taxpayers to report certain foreign financial accounts and offshore assets in order to target tax non-compliance.

Guernsey’s Chief Minister Peter Harwood said: “Guernsey has been committed to exchanging tax information since it signed its first Tax Information Exchange Agreement (TIEA) with the US authorities in 2002. We have enhanced those arrangements, and in doing so we have further enhanced our reputation and our leadership position on tax transparency.

"This is a further step in the direction we have been travelling for a decade or more. Fatca is shaping the new global standards in information exchange and once again Guernsey has shown its commitment to meeting those new global standards decisively and at the earliest possible juncture.

"This is an important agreement for our finance sector. It gives them the long-term sustainability and stability that they have asked for clearly and consistently.”

The agreement will bring certainty to the island’s financial industry, said Michael Betley, executive group chairman of Trust Corporation.

He said Fatca has been “enormously distracting and costly” for the industry, but added: “It is a relief that we have finally signed the US inter-governmental agreement, after many months of waiting. It has been a hard slog but at least we can now plan with a greater degree of certainty.

“At least it is non-discriminatory in the sense that it affects all businesses worldwide undertake financial transactions with the US or act for US persons.”

“Guernsey has accepted that as an island we wish to be part of a more compliant and transparent worldwide financial system and like it or not Fatca is part of that. We will not be able to pause for breath for too long as it is likely that similar multilateral initiatives will be following shortly,” he said.

The Fatca agreement was concluded 48 hours after Guernsey's parliament gave its unanimous approval and committed Guernsey to meet the highest standards of tax transparency. Jersey and the Isle of Man also signed similar agreements with the US Government.

At the same time, the island’s parliament also agreed to request the extension to Guernsey of the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.