American financial authorities decide to postpone by six months the deadline of FATCA requirements implementationPublish date: 17-07-2013
The Internal Revenue Service (IRS) and the US Department of the Treasury (Treasury) announced revised timelines for implementing various provisions under the Foreign Account Tax Compliance Act (FATCA). FATCA's provisions were scheduled to become effective according to a phased implementation calendar beginning January 1, 2014 and continuing through 2017. Experts have indicated the schedule did not provide sufficient time to modify current business practices and to make necessary modifications to systems and processes. In addition, they have noted that continued uncertainty about whether a future Inter-Governmental Agreement (IGA) will be treated as being in effect in a particular jurisdiction further hinders the ability to comply on a timely basis.
In response to these comments, Treasury and the IRS are postponing by six months many of the provisions that were scheduled to become effective in 2014, including the start of FATCA withholding, account documentation, and due diligence requirements, the earliest effective date of an FFI (foreign financial institutions) Agreement and various other requirements. Although no date was provided, Treasury and the IRS plan to publish a list of countries that will be treated as having an IGA in effect, even though local legislation to implement the IGA may not have entered into force by July 1, 2014.
The IRS FATCA Registration Portal was expected to be available to FFIs by July 15, 2013. According to the Notice, the FATCA Registration Portal is now scheduled to open on August 19, 2013.
"Treasury and the IRS continue to listen and respond to stakeholders and to make adjustments to the provisions of FATCA while keeping their primary policy objectives intact. Although the relief provided is welcomed, without additional guidance many of the substantive questions regarding the application of the final FATCA regulations and IGAs remain. As a result of this notice, companies should adjust their project plans accordingly”, stated Peter de Ruiter, Tax Partner, PwC Romania.
FATCA requires foreign financial institutions (FFIs) and US withholding agents to implement new procedures for tax information reporting and withholding, account identification, and documentation. It also requires certain FFIs to enter into an agreement with the US (an FFI Agreement). As an alternative, certain countries have entered into IGAs with the US to overcome legal impediments that prevented FFIs from entering into FFI Agreements with the US.
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