Documentos de Académico
Documentos de Profesional
Documentos de Cultura
July 2012
July 2012
Table of Contents
1. Classification
2. Due Diligence
3 Withholding Payments
3.
14
4. Reporting
21
Who
Wh is
i iimpacted?
t d?
1. Classification
Objective of FATCA
FATCAs objective is to uncover US tax evaders who invest directly in off-shore accounts or indirectly through
ownership of foreign entities
To reach this goal, FATCA will require foreign financial institutions (FFIs) to provide information to the IRS on US
accounts. In addition, passive non-financial foreign entities (NFFEs) will be required to provide information on
substantial US owners to withholding agents
To enforce compliance, a 30% withholding tax will be imposed on certain payments made to FFIs and NFFEs
th t fail
that
f il to
t make
k the
th required
i d disclosures
di l
FFIs
USFIs
D Dili
Due
Diligence
Classification
Withh ldi
Withholding
R
Reporting
ti
Classification
Classification
FFI Agreements
FFI Agreements are effective on or after 1 July 2013
PFFI must adopt written policies and procedures regarding due diligence processes
PFFI must conduct periodic internal reviews of its compliance with these policies and procedures and its
FATCA obligations
Observation: US tax authorities will not require mandatory external audits of PFFIs
Perform the requisite review and obtain documentation Complete review of pre-existing entity accounts not
previously identified as a prima facie FFIs
for all prima facie FFIs
Form W-8IMY on file indicates FE is a QI or NQI
Complete a responsible officer certification stating
Review of all high-value individual accounts
is complete
There were no formal or informal procedures in
place from 6 August 2011, on to assist account
holders in avoidance of Chapter 4 provisions
Classification
Withholding Agents
A withholding agent is any person, US or foreign, that has control, receipt or custody of a Withholdable Payment
Withholding agents are required to
i Classify
i.
Cl
if the
th payees b
by collecting
ll ti and
d verifying
if i d
documentation
t ti under
d d
due dili
diligence rules
l prescribed
ib d b
by th
the IRS
ii. Withhold on Withholdable Payments where documentation is missing, invalid or insufficient
iii. File information returns with the IRS
Withholding: 30% FATCA withholding can apply to
A Non-participating FFI (NPFFI)
An NFFE that fails to identify its substantial US owners, unless an exception applies;
Exceptions are provided for NFFEs deemed to represent a low risk of US tax evasion (e.g. publicly traded
companies or affiliates of publicly traded companies, foreign governments, and active trades or businesses)
A Recalcitrant
Classification
2. Due Diligence
FATCA Compliance and Impact
Critical Distinction
USFIs and PFFIs must adopt written policies and procedures regarding due diligence processes for both
pre-existing and new accounts
For USFIs, new account procedures should be in place by 1/1/2013
For PFFIs,
PFFIs new account procedures should be in place by 7/1/2013 or later effective date of the
FFI agreement
For off-shore accounts and pre-existing accounts, the rules try to minimise the amount of new information and
documentation that will be needed from account holders,, relying
y g instead on information and documentation
previously provided (for e.g. under local AML / KYC rules)
In some cases, financial institutions will need to collect additional information and documentation to make the
necessary FATCA classifications
USFIs and PFFIs must review customer information for indicia, or indicators, of US status and request
documentation from an account holder if one or more indicia of US ownership are found
Due Diligence
Account Distinctions
Direct US Accounts
Indirect US Accounts
Excepted US persons
Publicly traded corporations or affiliates
Tax-exempt organisations and IRAs
Federal, state or local government or
an instrumentality
Banks, dealers in securities, commodities
or derivatives
Real Estate Investment Trusts (REITs)
Regulated Investment Companies (RICs)
Common trust funds and charitable trusts
Due Diligence
Off-shore Obligation
Due Diligence
Financial Institutions
USFIs
FFIs Participating, Non-Participating, Deemed
Compliant, Excepted, Owner Documented,
Territory Organised
Non-Financial Entities
Non-financial US entity
Non-financial foreign entity (NFFE) Active,
Passive, Excepted, Territory Organised
Individuals
US Person
Foreign Person
Recalcitrant
Pre-existing Obligations
Due Diligence
11
Due Diligence
Exempted
Individuals
US$50,000 or Less
US$50,0001,000,000
Exempted
Entities
12
Due Diligence
US$250,000
$
,
or Less
> US$250,000
$
,
Exempted
13
Due Diligence
3. Withholding Payments
FATCA Compliance and Impact
14
15
Grandfathered Obligations
Payments on obligations outstanding on 1 January 2013
An FI will need to track grandfathered obligations and material modifications on its security data base, loans and
contractual obligations
Grandfathered obligations do not include
An instrument treated as an equity for US tax purposes
An agreement that lacks a definitive expiration or term (e.g. savings deposits, demand deposits)
A brokerage, custodial or similar agreement to hold financial assets for others and collect income
A master agreement that merely sets forth standard terms and not the specific terms of a particular transaction
Examples
p
of affected obligations
g
Debt obligations issued by US corporations, the US government or its agencies
A binding agreement to extend credit for a fixed term (e.g. line of credit or revolving credit facility)
Repos where the collateral seller is a US legal entity
A derivatives transaction entered into under an ISDA Master agreement and evidenced by a confirmation
16
17
PFFIs
y
of US source FDAP income to documented
Payments
US persons
Generally no withholding
28% backup withholding if
No TIN
Notification of Name / TIN mismatch
Notification by IRS that payee underreported
dividend or interest income
Payments of US source FDAP income to
non-US individuals
Withholding at 30% under Chapter 3, unless reduced
by treaty
USFIs must withhold on withholdable payments made to
Non-participating FFIs (including limited branches
p
facie FFIs))
and affiliates,, and prima
Electing participating FFIs (including
non-withholding Qis)
Non-compliant NFFEs
18
Withholding Practicalities
FATCA withholding is 30%
FATCA withholding cannot be reduced by either statute or treaty
Generally speaking,
speaking if there is FATCA withholding,
withholding then there would not be any US non-resident withholding
(Chapter 3) or backup withholding (Chapter 61)
If there is an NQI that is a PFFI and some of the underlying account holders are documented for FATCA
purposes and others are not, those who are not properly documented for FATCA purposes would be withheld at
30% while the other account holders may be subject to a different rate
19
Withholding Timeline
Types of Payments Subject to Withholding
Fixed, Determinable, Annual or Periodic (FDAP) Income from US sources
Tax Year
First Reporting
Date
2014
2015
2015
2016
After
1 January 2017
TBD
Dividends
Interest
Other US Source Income
Gross proceeds from US securities
Sales or Redemptions of Stock, Mutual Fund Shares, Debt Obligations, or Other
Securities
Capital Gain Distributions
Return of Capital Distributions
Foreign Passthru
Passthru Payments
Allocable Amount of US Source Income Distributed to Non-participating FFIs or
Recalcitrant Accounts
20
4. Reporting
FATCA Compliance and Impact
Report What
Name, TIN and address of
non-exempt recipient
Form Type
Authority
1099
2013
March 31
(Electronic Filing)
A
Aggregate
t amountt for
f each
h income
i
type, or
Separate amount for each position
(OID or gross proceeds)
Ownerdocumented FFI
TBD
2014
TBD
1.1474-1(i)(1)
TBD
2014?
March 15
1.1472-1(e)(2)
1042-S
2014
March 15
1.1474-1(d)
Name of NFFE
Foreign Recipient
21
Withholding Payments
22
Withholding Payments
23
Withholding Payments
24
Withholding Payments
25
Withholding Payments
26
Withholding Payments
Tax Year
First Reporting
Due Date
2013
30 September
2014
2015
2016
2016
2017
May elect to report all amounts paid to US persons as if the PFFI were a US payor, except that information for US
exempt recipients must also be reported
Incremental reporting of substantial US owners of non
non-US
US entities,
entities including the name of the entity and US
owner details
27
Withholding Payments
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