Recent Comments from the IRS on FATCA, QI and 871(m)
The IRS has made several interesting comments while speaking at conferences over the last couple of weeks.
- FATCA – according to the IRS, we can expect a revised version of the form W-8BEN-E sometime late this year or early next year.
- FATCA – according to the IRS, the process for registering sponsored entities will kick off late this summer and will include options for adding sponsored entities either individually or via a bulk upload.
- FATCA – according to the IRS, when a client provides a reasonable explanation for his/her loss of citizenship (given in lieu of a Certificate of Loss of Nationality), such a reasonable explanation should be fact based.
- Qualified Intermediary (QI) – according to the IRS, there are currently no plans to issue a revised version of the current QI agreement. Instead, the IRS will begin working on the 2017 version of the agreement and may issue a notice in the meantime to address a few issues that were not fully covered in the current agreement.
- Dividend Equivalent Payments (871(m)) – the IRS is planning to issue the final regulations on withholding on dividend equivalent payments soon. These regulations will retain the delta standard but will contain significant changes to reflect the feedback received on the proposed rules. The regulations will also push back the effective date of the regulations to apply to contracts and payments made after 1 January 2017.
Other IRS FATCA Updates
Updated IDES Information
The IRS has recently updated several of the IDES web pages including the IDES Resources, the IDES Technical FAQs and the FATCA XML Schema Recommendations for DocRefId web pages.
Upcoming IDES Testing Period
The FATCA IDES opens on Monday, June 1 2015 for testing and will be available until 12:00 EST on Monday, June 8 2015. All users that have completed their IDES enrollment by Thursday, May 28 2015 will be able to access the test session.
Recent Developments in IGA Countries
On 20 April 2015, the Federal Public Department of Finance released the Belgian FATCA Guidance Notes in draft format.
Additional information about the implementation of FATCA in Belgium can be found on the Federal Public Department of Finance’s website.
British Virgin Islands
Reporting British Virgin Islands financial institutions that have not already done so need to register with the British Virgin Islands Financial Account Reporting System by 1 June 2015. Nil reports are not required to be filed but if a financial institution would like to do so, such a financial institution would need to register to be able to do so. For more information, please see the recent press release.
On 20 May 2015, the Cayman Department for International Tax Cooperation issued another update concerning the notification and reporting deadlines for Cayman reporting financial institutions. Accordingly, notifications may now be submitted on or before Friday, 29 May 2015 and returns may be reported on or before Friday, 26 June 2015, without attracting adverse consequences or enforcement measures.
On 27 April 2015, the French tax authorities released a revised version (1.4) of the IT requirements for FATCA reporting.
The German tax authority (Bundeszentralamt für Steuern) frequently publishes information alerts in the German language for financial institutions and service providers. The information alerts are in the form of non-binding guidance but should be monitored by financial institutions operating in Germany.
In April, the German tax authority released an information alert addressing the publication of a communication handbook. This communication handbook gives detailed guidance on how to register as well as how data should be transmitted to the German tax authority via the “ELMA” procedure. Moreover, the most recent information alert offers the possibility of performing a testing procedure for reporting purposes.
On 29 April 2015, the United States and Kuwait signed a Model 1B Intergovernmental Agreement (IGA) to improve international tax compliance with respect to the Foreign Account Tax Compliance Act and to combat international tax evasion.
On 19 May 2015, the Inland Revenue Board of Malaysia (IRBM) posted an update stating that the date for submission of information in accordance with the draft FATCA guidance notes to IRBM has been postponed from 30 June 2015 as the Malaysia-US IGA is still being finalised. A new date will be announced in a future posting.
The Mauritius Revenue Authority (“MRA”) has announced that Mauritius-based financial institutions registered with the IRS for FATCA reporting have to report information in respect of the year 2014 to the MRA by 31st July 2015 for onward transmission to the US IRS.
The Mexico-US intergovernmental agreement to implement FATCA requires financial institutions which are located or resident in Mexico such as banks, asset managers, insurance businesses or fiduciaries (among others) to report financial information on certain accounts owned directly or indirectly by U.S. persons, to the Mexican Tax Authorities (Servicio de Administración Tributaria or SAT).
The filing deadline for the first of these reports was originally set at 31 May 2015, however, the Mexican tax authorities have this week announced on their website a revised deadline of 15 September 2015. This will shortly be published in the Official Gazette.
The first FATCA reports must now be submitted by 15 September 2015 and will include information such as:
· Name, address and tax reference number of the client
· Average monthly account balance or value and account number
Both entities and individuals will need to be reported. So, if the financial institution has any clients who are a) US individuals; b) US entities; or c) non-US entities controlled by US individuals or US entities (“US clients”), such financial institutions will need to be ready to report by 15 September 2015.
The deadline for reporting to the Dutch authorities is 1 June 2015. By then, financial institutions in the Netherlands need to provide a specific set of data to the Dutch tax authorities (DTA) based on the FATCA IGA concluded between the Netherlands and the US. For more information about how PwC Netherlands can assist you with this reporting, please see the attached flyer.
On 4 May 2015, President Bronislaw Komorowski signed a bill ratifying the agreement with the United States concerning enforcement of the Foreign Account Tax Compliance Act (FATCA), which provides a basis for the exchange of information about income and accounts of tax residents between the United States and Poland. The implementation process has not been finalised as the bill implementing the IGA (which is different from the bill on ratification) is still in the legislative process.
On 15 April 2015, the UK’s International Tax Compliance Regulations 2015 came into effect. These supersede the previous FATCA regulations that came into force on 20 June 2014. For more information regarding the changes, please see our recent PwC UK News Release.
The UK has also published an updated FATCA Schema, updated guidance regarding registration and reporting, and guidance around the recent changes for the classification of holding companies and treasury companies.
If you have any questions to the recent comments, please feel free to contact me.