Guernsey, the Isle of Man and Jersey are to negotiate partnership agreements with the US to implement the Foreign Account Tax Compliance Act, in a form similar to the UK-US agreement which was signed last month.

According to a statement from the governments concerned, discussions have taken place at official level between the Crown Dependencies jointly and the US. "Formal negotiations will now take place with the intention of concluding intergovernmental agreements rapidly," it said.

The agreements will follow the model inter-governmental agreement published by the US on July 26 and will be similar in form to the agreement between the UK and the US, signed on September 12. Any agreements signed with the US would need to be approved by each of the islands' parliaments, and such implementation will be through the domestic legislative procedures relevant to each of the three jurisdictions.

FATCA requires foreign financial institutions (FFIs) to enter into an agreement with the Internal Revenue Service, imposing reporting requirements on them for US accounts. The institution must get a client’s consent to report such details to the IRS, and a client who does not agree to this is considered recalcitrant under the Act, meaning FFIs have to withhold 30 per cent on all payments coming from the US.

"Basing FATCA implementation on an intergovernmental agreement is preferred by our industry and I am pleased to confirm our intention to follow this approach with the US Government," treasury minister Eddie Teare, member of the House of Keys, said in a statement. "Entering into this type of arrangement highlights and confirms the Isle of Man’s commitments to being a well-regulated jurisdiction which co-operates with other countries on tax matters in accordance with internationally agreed tax standards on transparency and exchange of information," he continued.

In a seperate statement today, Guernsey Finance welcomed the announcement. "The financial services industry in Guernsey has been busy getting up to speed with FATCA," said Fiona Le Poidevin, chief executive.

"This announcement will be very well received by [the] industry because it provides certainty for the future," she added. "That said, there is still much work to be done by those firms in preparation for FATCA and we will also have to wait to see the final form of the agreement which is reached between Guernsey and the US."

At the end of August it emerged that negotiations between the US and Switzerland on Swiss banks’ implementation of FATCA were underway, after the Swiss Federal Council authorized their start. “Negotiations between Switzerland and the US on the resolution of outstanding tax issues concerning the past are still ongoing. It is hoped that an agreement will be reached by year-end,” the Federal Council said earlier this year.