Foreign Account Tax Compliance services - Get ready now | Brochure
A practical approach
Financial institutions need to act now in order to understand the scale of the compliance challenge they face and to have the best chance of an orderly and cost effective implementation of the required process and procedures.
Many institutions are looking to reach a workable compliance standard applying the final regulations, or will need to apply provisions of the relevant Intergovernmental Agreement (IGA) signed by their countries with the United States. To have the best chance of reaching a workable solution, institutions are:
- Undertaking FATCA communication programmes, including workshops, to increase the awareness and understanding of the new requirements within the business
- Undertaking risk assessments, including a gap analysis for existing compliance processes which need to be scalable to accommodate the demands of other potential disclosure regimes, for example OECD
- Following negotiations with the U.S. Treasury or local governments, either individually or through trade associations, to discuss potential conclusion of an IGA between their local country and US tax authorities and request concessions around the application of the legislation to existing accounts, the information to be obtained, the verification and due diligence procedures and the agreement of transitional provisions
- Developing compliance strategies and establishing effective project management structures to implement those strategies effectively
- Understanding the associated systems, data and process implications
- Specifying and implementing the required systems, data and process enhancements
Our team of Luxembourg-based experts can support institutions through all FATCA implementation aspects. Deloitte also has extensive experience of working with global and national financial institutions to address a wide variety of regulatory related issues, including AML policies and procedures.
In addition to Luxembourg-based experts, we team with Deloitte’s FATCA Centres of Excellence in New York and London where there are over 400 financial services professionals who have performed large scale regulatory investigations for amongst others, major European banks. In addition to programme management and technical advice, these projects utilise a diagnostic approach to identify risk and then detailed data analysis and investigation to filter transactional and account information. Our tax team is experienced in all aspects of U.S. cross-border activities and in particular international information reporting and withholding regimes. Deloitte has outstanding relationships with the U.S. Treasury and the Internal Revenue Service and is uniquely placed to provide advice on good practice.
Enacted on 18 March 2010, FATCA became effective on 1 January 2013 and the first withholding phase will start on 1 January 2014. Final Regulations were released by the IRS on 17 January 2013.
Most institutions fear that the extent of the changes means that the time available to become compliant is insufficient, especially as many jurisdictions are still negotiating an IGA with the US, which might only be implemented into local law in the second semester of 2013. FATCA requires foreign financial institutions to obtain information about every holder of every account across all of their affiliated entities, to comply with verification and due diligence procedures to identify U.S. accounts, to report annually with respect to U.S. accounts and/or apply the 30% withholding.
FATCA threatens to impose a 30% withholding tax on income and capital payments from the U.S. unless financial institutions become compliant