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FATCA Update - U.S. and Canada Sitting Down at Bargaining Table - by Raphael Barchichat, Dan Vance and Dave Downie 

Global Tax Adviser

 

November 13, 2012

 

Raphael Barchichat
Montreal, International Corporate Tax

 

Dan Vance
Deputy Business Unit Leader, Toronto Tax

 

Dave Downie
Toronto, Canadian Corporate Tax

 

Finance recently announced that Canada and the United States have begun negotiations to enter into an information exchange agreement on November 8, 2012. The purpose of the agreement is to improve cross-border tax compliance under the Canada-U.S. tax treaty, including information covered under the U.S. Foreign Account Tax Compliance Act (FATCA). Hopefully this development will ultimately ease the compliance burden on Canadian financial institutions otherwise subject to the onerous U.S. FATCA reporting obligations.  

Background
The IRS issued proposed regulations implementing FATCA on February 8, 2012. The proposed regulations allow the government to use reciprocal agreements with foreign governments to achieve the goals of FATCA, rather than through the foreign FIs directly reporting to the IRS.

 

In July 2012, the United States released two versions of a "model intergovernmental agreement" to achieve the goals of FATCA by establishing a framework for reporting by non-U.S. financial institutions of certain financial account information to their respective tax authorities, followed by an automatic exchange of such information under existing bilateral tax treaties or tax information exchange agreements. These agreements were developed in consultation with European countries such as France, Germany, Italy, Spain and the United Kingdom.

 

Comments on negotiations
While Finance noted that many individuals and groups have provided comments on many issues resulting from the FATCA provisions, it will accept additional comments.

 

For more information, contact your KPMG adviser.

 

 

 

 

 

Information is current to November 13, 2012. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.

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