Foreign Account Tax Compliance Act (FATCA)

Transcription

1 Foreign Account Tax Compliance Act (FATCA) Andrea Garcia Castelao November 18, 2013 Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP FATCA Update Final FATCA regulations were released January 18th, 2013 Notice delayed FATCA Deadlines and the Opening of the FFI Registration Portal The FATCA timeline has been extended through 2017 By June 30, 2014 firms must begin: Income withholding begins for non-compliant entities New account onboarding procedures Enter into agreement with the IRS, in the case of Foreign entities The Registration portal opened on August 19th Actual registration takes place between January 1 and April 25th Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP 1

2 FATCA Update FATCA Technical Corrections were released September 10, 2013 Notice was released on October 29. It contains Announcements NPFFI aggregate payment reporting eased Choice to backup withhold or FATCA withhold Direct Reporting NFFEs/Sponsored direct reporting NPFFE It contains the Draft FFI Agreement. Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP What s to come FATCA Notice is part of the set of changes expected for the FATCA Regulations. The IRS also intends to release: Substantive changes to the Regulations (expected as a separate update later this year). Chapter 3 and Chapter 61 Regulations at the same time that are expected to better align these rules with FATCA. Forms status: Form W-9 has been finalized Forms W-8 s Notice requesting comments on the currently released draft Forms W-8 by December 23, The Notice also extends the comment request to the IRS s E-W8 Memorandum of Understanding ( MOU ) Program. Instructions for Forms 1042 and 1042S Form 8966 IGAs Additional IGAs will be negotiated and signed The list of countries will be increased Last Nov 4 th standard version, will it be the last? OECD Governments committed to approve a multilateral AEOI model by June 2014 based on Model 1 FATCA IGA. Draft Model actually shared with key stakeholders Big Bang approach FATCA becoming a global tax information reporting phenomenon Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP 2

3 IRS and Treasury Approach on IGAs Collaboration with foreign governments to: Remove legal impediments Allow for alignment and coordination with local law reporting practices Reduce the cost of compliance for Financial Institutions Issuance of two model Intergovernmental Agreements (IGAs) TIEAs or DTCs are not necessarily required to facilitate exchange of information under an IGA approach IGA applies to all Financial Institutions within the local country May actually complicate the application of FATCA for organizations that operate in multiple jurisdictions IGAs are still a moving target! Many new agreements are already in negotiation and will be signed IGAs open for renegotiation in the future and may be terminated IGAs may be modified by the contracting authorities (Favored Nation Clause) Revised version of the IGAs November 4 th, 2013 introduces modifications to the IGAs signed to date Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP What IGAs mean to US Withholding Agents Generally the same due diligence requirements for non IGA payees Required to collect updated Forms W-8 Including Foreign TIN Required to validate GIIN (Model 1 IGA FFIs are not required to provide a GIIN prior to 1 January 2015) Required to withhold on NPFFIs Note that FFIs located in IGA countries will not be subject to withholding except for those cases of significant non-compliance. FFIs Model 1 IGA Model 2 IGA Registration with IRS Required Required Registered Deemed Chapter 4 status Participating FFI Compliant Reporting To local tax authorities To the IRS General rules Withholding Model 1 IGA NO Model 2 IGA + FFI Agreement Certain Non consenting accounts + NPFFIs Notice Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP 3

4 IGAs in negotiation and IGAs signed to date Model 1 IGA signed Model 2 IGA signed Asia-Pacific Status Europe Australia Actively Engaged Status Status India Exploring Options China Exploring Options Belgium Actively Engaged Jersey IGA Expected Soon Japan Statement signed (Model2) Cyprus Actively Engaged Liechtenstein Actively Engaged Korea Actively Engaged Czech Republic Exploring Options Luxembourg Exploring Options Malaysia Actively Engaged Denmark Model 1 (Nov 2012) Malta Actively Engaged New Zealand Actively Engaged Estonia Actively Engaged Netherlands IGA Expected Soon Singapore Actively Engaged Finland IGA Expected Soon Norway Model 1 (April 2013) France Model 1 (Nov 2013) Romania Exploring Options Middle East *** Status Germany Model 1 (May 2013) Russia Actively engaged Bahrain Preliminary Meeting Gibraltar Exploring Options Slovak Republic Actively Engaged Kuwait Preliminary Meeting Guernsey IGA Expected Soon Slovenia Exploring Options Israel Actively Engaged Hungary Actively Engaged Spain Model 1 (May 2013) Lebanon Exploring Options Ireland Model 1 (Dec 2012) Sweden Actively Engaged Oman Preliminary Meeting Isle of Man IGA Expected Soon Switzerland Model 2 (Feb 2013) Qatar Preliminary Meeting Italy IGA Expected Soon United Kingdom Model 1 (Sep 2012) Saudi Arabia Preliminary Meeting United Arab Emirates Preliminary Meeting Jordan Preliminary Meeting Caribbean Status Americas Status Morroco Preliminary Meeting Bermuda Exploring Options Argentina Actively Engaged British Virgin Islands Exploring Options Brazil Exploring Options Africa Status Cayman Islands Negotiation concluded Canada IGA Expected Soon Sint Maarten Exploring Options Chile Exploring Options Seychelles Exploring Options Model 1 IGA in Barbados Honduras Exploring Options negotiation South Africa Exploring Options Mexico Model 1 (Nov 2012) Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP CRS and Model CAA Common reporting standard CRS draws on the US FATCA regime and contains the reporting and due diligence standard that upderpins the automatic exchange of financial account information. Model Competent Authority Agreement Model CCA allows countries implementing the CRS to put the exchange of financial account information into practice based on existing legal information exchange instruments such as bilateral tax treaties and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters Big Bang approach it is recognized that a wider approach allowing financial institutions to collect information on all or a wider group of nonresident accountholders from a common starting date may be desirable, even where such accountholders are not currently reportable. Reportable accounts based on residency: resident individuals and legal entities + resident controlling persons of Passive NFFEs Copyright 2013 Deloitte Development LLC. All rights reserved. 4

5 Timelines for FATCA compliance The timelines and requirements under IGAs and US FATCA Regulations are broadly aligned Go-live dates are the same. The timeline for implementing a multilateral system for information exchange is less clear US FATCA Go live date Reporting date 1 July May 2015 FATCA IGAs 1 July 2014 Before September 2015 OECD FATCA 2015??? 2016??? Foreign 8 Account Tax Compliance Act (FATCA) Deloitte Tax LLP Questions 5

6 Contact Information Denise Hintzke Global FATCA Leader Deloitte & Touche LLP Tel: Andrea Garcia Castelao Tax Manager - FATCA Deloitte Tax LLP Tel: angarciacastelao@deloitte.com Foreign Account Tax Compliance Act (FATCA) Deloitte Tax LLP This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this presentation. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2012 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited 6