As you are probably aware the final draft regulations for the Foreign Account Tax Compliance Act (FATCA) are due to be issued later this year with implementation taking place over the following years to 1st January 2017. Client entity types included in this legislation are wide-ranging and include Investment Banks, Private Banks, Fund Managers, Broking Houses, Custodian and Settlement Agents, Insurance Companies, Trusts and Individuals (including Green Card Holders and those who meet the substantive test criteria) who must apply primarily for Foreign Financial Institution (FFI) status.The implementation timeline can be summarised as follows:
March 2010 – FATCA signed into law
August 2010 – IRS issues notice 2010-60 providing preliminary FATCA guidance
April 2011 – IRS issues notice 2011-34 modifying and supplementing notice 2010-60
July 2011 – IRS issues notice 2011-53 modifying notice 2011-34 and providing timeline for phased implementation
February 2012 IRS issues proposed regulations and joint intergovernmental statement (partnership agreements)
Summer /Fall 2012 (September through November) IRS issuance of final FATCA regulations
1st January 2013 – FFI electronic application begins. Obligations already outstanding on this date are 'grandfathered' and will not be subject to FATCA withholding
1st January 2014 – FATCA withholding on US source FDAP (Fixed, Determinable, Annual Payments) begins. Reporting in 2014/15 (for calendar years 2013/14) participating FFIs are required to report only name, address, TIN (tax identification number), account number(s) and account balances of US accounts.
1st January 2015 – FATCA withholding on gross proceeds begins
1st January 2017 – FATCA reporting on foreign pass through payments begins. Full information reporting is required after this date.
Failure to implement these regulations will result in a 30% withholding tax deduction on not only dividend and interest payments but also other payments as above.
If you meet the criteria as a Foreign Financial Institution (FFI) and wish to avoid withholding tax deduction on dividends and interest from 1st January 2014 you must have an agreement with the Internal Revenue Service (IRS) by 30th June 2013. Thereafter you must have all upgraded systems and documentation in place for 1st January 2014.
Goal has been following these new regulations and give or long-standing expertise in the field of withholding tax we are able to offer a consultancy service to assist our clients in ensuing their compliance with the FATCA regime.
Our consultancy is chargeable at a daily rate or fixed-price fee and covers activities such as :
- Provision of risk assessment for legal entities and subsequent policies planning
- Assisting in applying for legal entity / client waivers as appropriate
- Programme & project management support for end delivery with tax, legal, compliance, operations and IT stakeholders forming Steering Committee structures
- Ensure group communications strategies are defined
- Timetable of programme / project deliverables
- Analysis of legal entities client & eligible asset class data utilising structured requirements gathering tools and processes
- Technical support and application development as required for modifications to systems, controls and procedures
- Compose procedures and train staff for a scalable IRS reporting solution and establish internal ownership
- Undertake internal & external testing strategies with the IRS exercising quality assurance controls at defined checkpoints with key stakeholders
- Ongoing support for handover and sign off for agreed solutions & strategies
- Agree support for maintenance, consulting and services as may be required for future regulatory changes
If this consultancy service is of interest please do not hesitate to contact us.