US Treasury publishes further FFI guidance for Fatca Model 2 users
The US Department of the Treasury and US Internal Revenue Service have published proposed guidance for Foreign Financial Institutions as defined under the Foreign Account Tax Compliance Act (Fatca), and which are covered by Model 2 Intergovernmental Agreements (IGAs).
The Model 2 IGAs relate to bilateral agreements struck between the US and other countries, in which companies that are required to report withholding taxes to US authorities do so directly. Under the so-called Model 1 arrangements, the reporting is done first to the local government, which then authorises the transfer of the reporting data to the US.
Both Models are intended to facilitate data transfers to authorities in the US responsible for collecting taxes from US citizens.
The latest guidance note from the US Treasury and IRS are intended to lay out in more detail the specific requirements made of FFIs – Foreign Financial Institutions – which are required by law (Fatca) to make sure they report the correct withholding taxes implemented at source on their own clients.
The guidance “provides FFIs with advance notice prior to the beginning of Fatca withholding and account due diligence requirements on July 1, 2014. The FFI agreement will be finalized by year end,” the US Treasury and IRS stated.
“The Agreement and forthcoming guidance have been designed to minimize administrative burdens and related costs for foreign financial institutions and withholding agents,” said deputy assistant secretary for International Tax Affairs Robert Stack.
For the draft notice and FFI agreement, click here: http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-(FATCA)