Banks must take measured and cost-effective approach to compliance
While FATCA’s recent implementation delay has provided breathing space for financial institutions, they will do well to employ a measured and cost-effective approach to compliance. November 05, 2012 | Magessan RajAccording to a recent announcement by the US Internal Revenue Service (IRS), the deadlines for The Foreign Accounts Tax Compliance Act (FATCA) have been delayed yet again. Signed into law by US president Barack Obama in 2010, in a bid to recover some of the estimated $100 billion that the IRS claims it loses every year to tax evasion, what FATCA does, is essentially force banks to disclose information about US clients’ offshore accounts. Notable aspects of FATCA that have been delayed include new account onboarding procedures and the timeline for entering into a foreign financial institution agreement with the IRS. Instead of the start of next year, institutions will now have until January 2014 to comply with regulations, and until January 2017 to start withholding taxes from customer accounts. FATCA has been a source of major concern for financial institutions that must comply with the rules or risk incurring harsh penalties, or worse still, possible exclusion from the US markets. The IRS’ decision to delay FATCA’s start date no doubt provided timely relief for financial institutions, who have been under immense pressure as key dates for FATCA implementation loomed large, although final regulations under FATCA have not been issued as yet. The final rules were originally anticipated to be released in mid-2012, but were delayed, and are now expected to be released by year end. It is no wonder that banks see the rule as a burden, with uncertainty regarding FATCA’s final regulations and the additional effort required to increase the scope of information held on banks’ US customers. Richard Weisman, US tax partner in Baker & McKenzie Hong Kong, stated, “This news will be met with relief by thousands of institutions that have been concerned about the ability to comply with FATCA in light of the extensive compliance obligations, issues raised under local law, and the lack of final regulations to provide guidance.” Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Regulation, Risk and Regulationriskregulation,Risk and Regulation, Regulation,Risk and Regulation, Keywords:FATCA, IRS, IGA, US Treasury, Richard Weisman, Baker & McKenzie, Tim Clough, PricewaterhouseCoopers FATCA, IRS, IGA, US Treasury, Richard Weisman, Baker & McKenzie, Tim Clough, PricewaterhouseCoopers
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