Interactive Data enhances services to facilitate Fatca compliance
Financial information provider Interactive Data Corporation has announced that it has released a comprehensive reference data to assist financial services firms as they prepare to comply with the US Foreign Account Tax Compliance Act (FATCA).
Interactive Data’s FATCA service will provide firms with instrument level details to help them determine US federal income tax withholding for instruments generating US sourced income. The service will flag instruments subject to FATCA withholding and classify them as: fully liable, partially liable or exempt.
Under Internal Revenue Service (IRS) regulations, the exempt status of a grandfathered obligation may change as the result of a “material modification” of the instrument under IRS rules. When a material modification occurs, Interactive Data will reflect the change by updating the FATCA withholding status and the qualifying date in its FATCA service.
“Although firms may have a handle on some of the changes required to client on-boarding systems to comply with FATCA, the instrument data side remains a significant challenge for the majority of firms. As a result, any service that can take some of the pain away from firms in terms of flagging this instrument data is likely to be welcomed,” said Virginie O’Shea, senior analyst at Aite Group.
In an effort to assist clients and other market participants, Interactive Data helped to launch an industry advisory group in January 2013 to examine the operational and data complexities created by FATCA requirements. The FATCA working group held a series of meetings earlier this year and submitted a comment letter to the U.S. IRS to request clarification regarding a number of aspects of the FATCA implementing regulations.
“Interactive Data is committed to helping clients ease the burden of regulatory compliance. We have engaged with market participants to discuss industry issues relating to FATCA implementation and it was apparent that many firms are concerned about their ability to comply with the new FATCA regulations,” said Hubert Holmes, Managing Director of Reference Data for Interactive Data. “The new service will enable firms to identity the instruments that may fall within the scope of FATCA and help monitor for the occurrence of material modifications that result in a change in withholding obligations.”