The British Virgin Islands (BVI) is the latest offshore financial centre to begin talks with the US Treasury regarding compliance with the Foreign Account Tax Compliance Act (FATCA), which is designed to tackle global tax evasion.

Under FATCA, which is due to be introduced in July next year, foreign financial institutions (FFIs) will be required to disclose details of accounts held abroad by US citizens, including account ownership, balances and amounts moving in and out of the accounts. Failure to notify the Internal Revenue Service (IRS) about any accounts worth more than $50,000 (£32,000) will result in a requirement to withhold 30% tax on US-source income.

BVI Premier Orlando Smith said the Caribbean island is discussing an 'intergovernmental agreement with the US to comply with FATCA, saying 'we are of the very considered opinion that this course is the best one to adopt.'

Earlier this month the Cayman Islands announced that it has concluded negotiations with the US on agreements which will pave the way for automatic exchange of information under FATCA, and the Bahamas and Bermuda have indicated their intention to comply with FATCA.

The BVI and the Cayman Islands, along with Anguilla, Bermuda, Montserrat and the Turks and Caicos Islands have already agreed to automatically share tax information with the UK, France, Germany, Italy and Spain.