The State Bank of Vietnam and Deloitte Vietnam jointly held FATCA conference
A conference for updates on the Foreign Account Tax Compliance Act (FATCA), jointly held by the State Bank of Vietnam (SBV) and Deloitte Vietnam and attracting representatives from more than 130 credit institutions and foreign banks’ branches, took place in Hanoi recently.
Introduced in the United States in 2010, the primary objective of FATCA is to prevent tax evasion by US persons through financial accounts (including depository accounts, investment accounts and some other accounts) opened in foreign financial institutions (FFIs).
Accordingly, FATCA request FFIs to report, on a periodical basis, financial accounts the owner of which is US citizens.
Failure to comply with FATCA requirements, certain fixed, determinable, annual, periodic (FDAP) US source income of the FFIs shall be subject to 30 per cent withholding tax.
FATCA is then creating significant exposures to financial institutions all over the world for preparing resources and procedures for compliance, since it does not only impact the operations of FFIs but also their clients.
“Temperature” of FATCA is rising in Vietnam as well as in other countries in the region. Facing the strict timelines with the registration deadline of May 5, 2014 to qualify for being included in the first compliance list of the US and the official date of FATCA compliance commencement on July 1, 2014, credit institutions in Vietnam are awaiting detailed instructions by the State Bank of Vietnam to timely and effectively implement this legislation.
At the conference, Phan Vu Hoang, Tax Partner - head of FATCA project team of Deloitte Vietnam updated and shared with banks various in-depth knowledge and experiences about the objectives and implementation mechanism of FATCA as well as notable points for credit institutions in Vietnam at the time when Vietnam has not yet signed the Intergovernmental Agreement (IGA) with the US but the deadline for FATCA compliance has come in sight.
Many questions were raised to the speaker on the approach to identify clients whose accounts are reportable, and how to prepare resources for a timely implementation of FATCA compliance.
Deloitte also introduced and proposed a Rapid Implementation Programme which may enable credit institutions to comply with FATCA in a timely manner.
Head of Anti Money Laundering Department, Nguyen Van Ngoc noted government agencies, particularly the SBV and Ministry of Finance, had agreed to propose to the Government the signing of IGA for FATCA implementation.
After getting the government approval, authorities would issue detailed instructions at the earliest possible time.
Having extensive exposures in tax and banking advisory along with rich experience with various FATCA consulting projects in many countries, Deloitte is committed to supporting the government’s authorities in drafting regulations for FATCA compliance to assist Vietnamese financial institutions to timely comply with this legislation.
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