US holds off on Fatca with phased deadline
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The US Treasury and the Internal Revenue Service have delayed the deadline to comply with the foreign account tax compliance act.
Fatca requires any foreign financial institution to sign an agreement that they will provide the IRS with information on any US taxpayers they deal with. A 30 per cent penalty withholding tax will be levied on the gross proceeds of any US assets for non-compliance.
The industry is concerned that Fatca will add an extra layer of costs as well as presenting a major compliance headache to asset management firms, pension schemes and IFAs. KPMG estimates it could cost asset managers up to £45 per client.
The rules were due to be introduced in January 2013 but a notice issued by the Treasury and the IRS last week has set out a phased timetable for firms to comply with the rules
Under the new timetable FFIs have to enter an agreement with the IRS by June 30, 2013.
The withholding tax will be levied on US source dividends and interest from January 1, 2014 and tax will be fully phased in, including on gross proceeds, on January 1, 2015.
IRS commissioner Doug Shulman says: “This notice is a reflection of our serious commitment to implementation of the statute but also a serious commitment to listen to the implementation challenges of affected financial institutions.”
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Readers' comments (1)
Anonymous | 21 Jul 2011 12:37 pm
The IRS commissioner's statements in fact reflect the reality that his department, like the foreign banks themselves, simply cannot prepare for this unworkable, impractical, vastly over-reaching, extra-territorial land-grab of a US tax law within the time available.
He cares nothing for the views of the "affected financial institutions" themselves. Not a jot.
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