US FATCA - Update

US FATCA - Foreign Account Tax Compliance Act

The US Internal Revenue Service (IRS) released Announcement 2012-42 recently, which includes revised timelines for withholding agents and foreign financial institutions (FFIs) to complete due diligence and other requirements under the Foreign Account Tax Compliance Act (FATCA). With this release, the earliest effective date for FFI Agreements of Participating FFIs (PFFIs) in non-IGA countries is 1 January 2014. The Announcement indicates that the final FATCA regulations will incorporate the newly extended timelines and expanded definitions provided in Announcement 2012–42.

Implications

According to Ernst & Young, Announcement 2012-42 provides helpful guidance and some relief to withholding agents and FFIs that are facing significant planning and implementation challenges stemming from the due diligence timelines in the proposed regulations and IGAs. Harmonising the timelines will help streamline implementation projects, particularly for large multinational organisations with FATCA responsibilities in many jurisdictions. Although the timing of the issuance of the final FATCA regulations remains unclear, Treasury and IRS personnel have indicated that they are expected to be issued by the end of the year. The formalisation of additional FATCA IGAs is still anticipated.

For further information or to discuss the implication of this Act on your organisation please refer to your usual contact at DCS or Alexey Katulevskiy direct on ayk@direct-capital-solutions.com or T. +7 985 998 8860 begin_of_the_skype_highlighting +7 985 998 8860 FREE end_of_the_skype_highlighting.