FATCA: IRS EXTENDS TIMETABLE FOR IMPLEMENTATION
- 1. For further discussion or information regarding FATCA, please call Marilyn Ramplin or Tracey Hendriks on 011 783 9390 or email tracey@hedgefundacademy.co.za. Vat No: 4560 261 069 FATCA: IRS EXTENDS TIMETABLE FOR IMPLEMENTATION On 8 February 2013 the National Treasury and SARS confirmed that they are in negotiations with the Internal Revenue Service (IRS) in the United States regarding a proposed inter- governmental agreement (IGA) that will enable South African parties to comply with the US Foreign Account Tax Compliance Act (FATCA). Under the proposed IGA between Treasury and the IRS, South African Foreign Financial Institutions (FFI’s) will report information regarding US account holders directly to SARS/Treasury, who in turn will report this information to the IRS under an automatic exchange of information. A withholding tax of 30% on all forms of investment income that FFI’s earn directly or indirectly from US assets will be imposed on all FFI’s that do not enter into disclosure agreements with the relevant regulatory authority. South African FFI’s include banks, asset managers, private equity funds, long-term insurers and other participants in the financial sector. On 12 July 2013 the IRS announced a six-month extension to the timetable for the implementation of FATCA. The due date for the imposition of withholding tax has been extended from 1 January 2014 to 1 July 2014 and the deadline for FATCA-compliant on- boarding procedures to be in place has been extended to 1 July 2014. The definition of “grandfathered obligations” has been amended, to refer to obligations outstanding on 1 July 2014. Other deadlines, including that for the completion of due diligence procedures on pre-existing accounts, have also been extended and the first report, due by 31 March 2015, will now only cover US accounts identified by 31 December 2014; the requirement to report on accounts as at 31 December 2013 will be removed. The IRS stated that the deadlines and definitions applicable for jurisdictions with IGAs will reflect the changes, either through amendments to the IGA under discussion or through the operation of the most favoured nation clause in existing IGAs. The IRS registration portal, that had been scheduled to be available from 15 July 2013, is now scheduled to be live from 19 August 2013. The IRS has also stated that any information submitted prior to 1 January 2014 will not be considered “final”, allowing firms to familiarise themselves with the registration process. No Global Intermediary Identification Numbers (GIINs) will be issued in 2013. The first list of FFIs (“Foreign Financial Institution”) will be published by 2 June 2014, and FFIs should register by 25 April 2014 to be sure of inclusion. FATCAUPDATE