Based on a quick comparison of the new and previous model IGAs, the key changes include:
- transitional procedures for identifying new accounts opened prior to the earlier of the entry into force of the IGA, or when financial institutions will be compelled to comply under local law; and
- removal of references to working with the OECD and other jurisdictions on the adoption of a global Common Reporting Standard (or GATCA).
The transitional procedures would provide at least a year’s relief from the full effect of FATCA. These transitional procedures would apply if New Zealand provides written notice to the United States that New Zealand currently lacks the legal authority to require financial institutions to require individual account holders to provide self-certifications or to apply the specified due diligence procedures for new entity accounts.
Whether New Zealand provides this notice to the United States will depend on a number of factors, not least of which are expectations around when the IGA and FATCA enabling legislation will be finalised.
The updated Annex I also includes transitional provisions referred to in Notice 2014-33 which allows financial institutions to treat new entity accounts opened before the end of 2014 as pre-existing accounts. This effectively provides a six-month extension to the implementation date for on-boarding entities under FATCA. We note that only one set of transitional rules can be applied.
The changes relating to the OECD Common Reporting Standard are interesting in the sense that the provisions have been removed, however, this will not have any impact for New Zealand financial institutions implementing FATCA.