The US Department of Treasury and Internal Revenue Service have announced that countries that have largely completed InterGovernmental Agreement (IGA) negotiations with the United States can be treated as having an IGA in effect until the end of 2014, despite the agreement not being finalised.
New Zealand is one of the countries that will be treated as having an IGA in force which will pave the way for New Zealand financial institutions to register for FATCA with the IRS. The announcement also contains an extension from 25 April 2014 to 5 May 2014 for financial institutions to register and receive a Global Intermediary Identification Number (GIIN) and be included on the first iteration of the list of FATCA compliant financial institutions to be published on 2 June 2014. Entities registering by 3 June 2014 should also be assigned a GIIN by 1 July 2014.
These announcements will be especially welcomed by New Zealand financial institutions with offshore investments as it will mitigate the FATCA withholding risk that they were facing due to an inability to register and obtain a GIIN to provide to offshore financial institutions.
Whilst these announcements provide New Zealand financial institutions with more certainty on progressing their FATCA programmes, the signed NZ IGA and enactment of the ‘November’ Tax Bill containing the FATCA enabling provisions are keenly awaited along with further guidance from Inland Revenue on a number of different topics.