IGAs signed with Hungary and Canada
IGA pending with UAE
On 5 February 2014 the Treasury Department posted the text of the intergovernmental agreements (IGAs) between the United States and Canada and between the United States and Hungary under FATCA.
According to yesterday’s release from Canada’s Department of Finance, the FATCA rules had raised a number of concerns in Canada—among both dual Canada-United States citizens and Canadian financial institutions. The IGA is intended to address these concerns and provide that:
- Under the agreement, financial institutions in Canada will not report any information directly to the IRS. Rather, relevant information on accounts held by U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) will be reported to the Canada Revenue Agency (CRA). The CRA will then exchange the information with the IRS through the existing provisions and safeguards of the Canada-United States income tax treaty (consistent with Canada's privacy laws).
- The IRS will provide the CRA with enhanced and increased information on certain accounts of Canadian residents held at U.S. financial institutions.
- Significant exemptions and relief have been obtained. For instance, certain accounts are exempt from FATCA and will not be reportable. These include Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Disability Savings Plans, Tax-Free Savings Accounts, and others. In addition, smaller deposit-taking institutions, such as credit unions, with assets of less than $175 million will be exempt.
- The 30% FATCA withholding tax will not apply to clients of Canadian financial institutions, and can apply to a Canadian financial institution only if the financial institution is in significant and long-term non-compliance with its obligations under the agreement.
- Draft legislation to implement the IGA will be released in Canada for comment shortly.
UAE - FATCA agreement pending signature
Reports from the United Arab Emirates reveal that in late January 2014, representatives of the United States and the UAE were preparing to sign an intergovernmental agreement (IGA) to implement provisions under FATCA.
It is reported that the FATCA intergovernmental agreement (IGA) to be signed is the IGA Model 1.
Read a January 2014 report prepared by KPMG LLP: MESA Tax Update – January 2014: United Arab Emirates - US FATCA and other news. The KPMG report also discusses the following topics:
- UAE participation in the OECD’s tax transparency forum
- Increased property transfer fees in Dubai
For further information, please do not hesitate to contact us.
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