United Kingdom

Details

  • Industry: Financial Services
  • Type: Press release
  • Date: 18/01/2013

Final FATCA regulations bring much needed certainty but implementation time frame remains challenging, says KPMG 

 

Commenting on new FATCA final regulations released in the evening of 17 January, Jennifer Sponzilli, KPMG US tax partner based in London, commented:

 

“While the FATCA final regulations bring much needed certainty to global financial institutions, the implementation time frame remains challenging with the first effective date less than a year away.

 

“The FATCA final regulations confirm prior US government statements that debt instruments outstanding on January 1, 2014, or any agreement requiring a secured party to make a payment with respect to, or to repay, collateral posted to secure a grandfathered obligation, are indeed grandfathered from withholding.

 

“Thankfully for the investment management industry, the FATCA final regulations generally align the definition of an investment entity as a financial institution with that in the IGAs (‘Inter-governmental agreements’) and provide a centralised reporting option for fund managers.  There is still no further clarity, however, with regard to whether the umbrella fund or each sub fund must register under the final regulations.

 

“The FATCA final regulations make clear that the registration (or Foreign Financial Institution Agreement (‘FFI’) execution, as appropriate) must be completed for all FFIs, within and without IGA counties, by 25 October 2013 in order for the FFI to be included in the IRS's list of participating or registered deemed compliant FFIs by December 2013.  FFIs not included in the December 2013 list may not be able to avoid withholding on 1 January 2014 for new accounts or contracts.

 

“The insurance industry will welcome provisions in the FATCA final regulations that adopt the IGA provision excluding from identification individuals buying new insurance products with a cash value exceeding $50,000 at any time during the calendar year. Perhaps more important is the elimination of the requirement to refresh documentary evidence for offshore policies, subject to change in circumstances, once the original documentary evidence has been collected.”

 

Notes to editors

 

On January 17 the United States’ Treasury Department and IRS for publication in the Federal Register final regulations under the Foreign Account Tax Compliance Act (FATCA) provisions.

 

The FATCA regulations relating to information reporting by foreign financial institutions and withholding on certain payments to foreign financial institutions and other foreign entities were proposed in February 2012. Today's release finalises the proposed regulations with certain changes.

 

The final regulations are scheduled to be published in the Federal Register on January 28, 2013.

 

Read the final regulations: T.D. 9610 [PDF 1.1 MB]

 

Read a related Treasury Department release that describes the FATCA regulations released on January 17: Treasury FATCA release (January 17) [PDF 205 KB]

 

 

-Ends-

 

For further information please contact:

 

Margot Cowhig, KPMG Corporate Communications

Tel:  0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk

 

KPMG Press Office: 0207 694 8773

 

About KPMG:

 

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  KPMG International provides no client services.

 

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