.png)
.png)
HMRC are set to introduce legislation that will bring into effect the UK/US agreement to improve international tax compliance and implement America's Foreign Account Tax Compliance Act (FATCA).
The Revenue has responded to the findings of a recent consultation by publishing draft regulations and guidance. Comments should be emailed no later than 13 February.
The US Treasury and the Internal Revenue Service (IRS) have issued final regulations to implement FATCA, which build on intergovernmental agreements (IGAs) aimed at fostering international cooperation; phase in the timelines for due diligence, reporting and withholding; and align them with the agreements; and clarify the scope of payments not subject to withholding tax.
They are also intended to refine the treatment of investment entities to align the obligations under FATCA with the risks posed by certain entities; and clarify the compliance and verification obligations of foreign financial institutions (FFI).
KPMG’s Jennifer Sponzilli, a US tax partner, said the new American rules “make clear that registration must be completed for all foreign financial institutions, within and without IGA counties, by 25 October 2013 for the institution to be included in the IRS’s list of participating or registered deemed compliant FFIs by December 2013.
“Those not included in the December 2013 list may not be able to avoid withholding on 1 January 2014 for new accounts or contracts,” she added.
Tax investigations expert Jayne Newton of DLA Piper said the regulations were “a significant step forward in the creation of the legislative landscape for FATCA” and “confirm the extension of the grandfathering deadline to 31 December, which, while expected, provides financial institutions with the authoritative certainty that was lacking in the absence of any formal clarification”.
