Weekly FATCA Updates: May 21-May 27, 2016

Here’s a full list of weekly FATCA updates compiled by the experts in our Tax Department to help you. The FATCA reporting deadline of May 31 is right around the corner and countries have kicked up efforts to issue guidance so financial institutions can comply on time or changes to systems and other important information that provide necessary guidance for implementation, including extensions. Also included, the ever-busy jurisdiction of Jersey has released a wealth of FATCA and CDOT updates once again.

IRS Lists Moldova and St. Vincent & The Grenadines with “In Force” Status

The IRS recently changed Moldova’s and St. Vincent & The Grenadines’ FATCA status to an “In Force” status.  Previously, both countries’ status was “Signed.” “In Force” status means that the countries have passed and approved legislation and that the FATCA agreement is active. Click here to view the updated IRS FATCA List.  

Slovenia Updates Technical Guidance and Opens Testing Portal for FATCA Reports

Slovenia recently updated its detailed description of changes-technical information document and announced that FIs can submit test reports for 2015 FATCA filings.  The document includes instructions regarding determining the value of unique code elements of the report (MessageRefIds and Doc RefIDs), determining TINs when the TIN is not provided, registering sponsored entities, and sending reports via PARS.  

Bulgaria Releases New FATCA Information and Guidance

The National Revenue Agency of Bulgaria has released a notice relative to information reporting pursuant to FATCA. Bulgaria has affirmed that FATCA reports will be submitted in XML format following the IRS FATCA XML v. 1.1 format. The notice also contained general instructions about the filing process. Additionally, Bulgaria published a FATCA Business Rules document that contains schema guidance for the submission of FATCA information in Bulgaria.  

France Amends Its FATCA Legislation

France has amended Decree No. 2015-907 with Decree No. 2016-521. The only change to the legislation was that the word “conservateur” was deleted from Article 2, Section 1, Number 4, Letter B. The effect of this change is to make it so that the gross total interest, dividends and other income generated by the assets held in ANY account (not just a custody account), paid or credited in respect of such an account, including the total amount of all sums repaid or redeemed to the holder during the calendar year are to be reported to France.  

Finland Updates FATCA Filing Guide

Finland has replaced manual A57/200/2015 with manual A32/200/2016. The instructions in the guide have not been changed, but some of the obligations are spelled out a bit clearer. A few notable changes:

• References to EU-FATCA have been changed to refer to DAC-2 instead;
• Expanded explanations of why certain entities are or are not financial or non-financial entities have been added as well with a particular focus on investment units;
• A notice that Finnish definitions of a financial institution are different from the standard CRS and DAC-2 definitions of a financial institution;
• Sale prices and dividends of retained custody account shares must be reported based on the deposit account as accrued income even if they are paid to the account holder’s deposit account;
• A guide to how estates should be reported for FATCA purposes.

Here is the updated FATCA Filing Guide.  

Costa Rica Announces FATCA Reporting Timeframe and Modification to FATCA Reporting Instructions

Costa Rica has announced a timeframe for FATCA reporting with the country. Beginning on May 30, 2016, Costa Rica will update their website to allow for the submission of test data to the country. Between June 20, 2016 and July 31, 2016, Costa Rica will allow the submission of FATCA reports with the country. The announced modification makes it so that when reporting information for TY2016, Financial Institutions should include in their XML file, the name of any Non-Participating Financial Institution to which payments were made during the calendar year and the total amount thereof.  

Singapore Announces Change of FATCA IDES Encryption Mode and Reminder to File FATCA Returns

Singapore has announced a change that the IRS has made to its FATCA IDES Encryption Mode stating that after July 9, 2016, IDES will no longer accept data packets encrypted with ECB cipher mode and Reporting Singapore-based Financial Institutions (SGFIs) will be required to transmit FATCA reporting packed using CBC cipher mode. However, all FATCA reporting packets submitted prior to July 9, 2016 must be encrypted using the current ECB cipher mode. Singapore also released a reminder that all Reporting SGFIs must submit their FATCA Return for TY2015 by May 31, 2016. To view the announcements, please click here.  

Slovak Republic Provides Advance Notice for FATCA Reporting

The Slovak Republic has announced that financial institutions have until May 31, 2016 to obtain a GIIN and register with the country for FATCA Reporting. Financial Institutions must register with the country within 15 days of obtaining their GIIN. Financial institutions who fail to register in time will face a 30% withholding tax on accounts that fail to comply with FATCA regulations.  

Philippines Releases New FATCA Advisory

The Philippines has released a new FATCA Advisory containing new information on the status of FATCA reporting with the country:

• FATCA Reporting will not take place until the Philippines-U.S. FATCA IGA has been passed by the Philippine Senate and entered into force. If the IGA enters into force in September 2016, Philippine Financial Institutions (PFIs) should be able to transmit data for reportable accounts in 2014 and 2015;
• Transmission of FATCA data by PFIs shall be through IDES. The Bureau of Internal Revenue (BIR) will use the Model 1 Option 2 data collection tool of IDES;
• IRS has schedules a test period for IDES from June 16-30, 2016. Only PFIs which registered with the IRS, obtained their GIINs and enrolled in IDES can participate in the testing exercise;
• The Competent Authority Arrangement sets out the administrative details of the IGA and it will be effective once the IGA has entered into force.

Mexico Releases New FATCA Reporting Information

Mexico has released new FATCA reporting information providing the standardized criteria for FATCA reporting. The release covers a variety of topics including:

• Security protocol,
• How to name files that will be submitted to the Servicio de Administracion Tributaria,
• Matching the XML message identifier to the file name,
• A catalog of common errors and descriptions of those errors; and
• XML character restrictions.
•  

———— Jersey Updates: FATCA & CDOT —————–

Jersey Issues Updated IT Guidance

Jersey issued updated IT Guidance in preparation for the upcoming reporting due date of June 30, 2016. This updated Guidance includes two changes, which are:

• UK Reporting: Jersey now allows for use of the CRS schema in addition to the standard FATCA XML 1.1 schema. Financial institutions can decide which format is best for them. For more information, users should reference the OECD CRS Handbook.
• Alternative Reporting Regime (ARR, UK Only): Jersey elaborates on their ARR reporting by providing coverage dates (April 6 2014 – April 5 2015), a due date of June 30, 2016, and a start date for ARR functionality through the AEOI portal (May 23, 2016).
  • Users must use the ARR template provided by Jersey, which can be found here.

Click here to view the updated IT Guidance.

Jersey Issues Practical Reporting Guidance for FATCA and CDOT

Jersey also created a page detailing practical guidance in relation to FATCA and CDOT reporting. This practical guidance was created in response to user questions and requests for clarification on both methods of reporting. Jersey cautions that these notes are practical in nature, and that users must still comply with all requirements in accordance with the relevant regulations and tax treaties. Changes to the Jersey AEOI Online Portal:

• CDOT reporting between July 1, 2014 and December 31, 2014, CDOT reporting for calendar year 2015, and FATCA reporting for calendar year 2015 must be submitted electronically through the live online AEOI portal by June 30, 2016.
  • A testing portal is also available here.
  • Users must register separately for the testing and live portals, and note that registration details for one will not work for the other.
• Reports made using the Alternative Reporting Regime (ARR) covering the period between April 6, 2014 and April 5, 2015, must be submitted through the AEOI portal, and are due by June 30, 2016. ARR functionality will be available beginning May 23, 2016.
• AEOI Portal Validation Rules have been updated to allow for the use of the underscore character in FATCA and CDOT reports submitted electronically.
  • This is effective as of May 23, 2016.
  • The underscore character was previously restricted due to error message generated when used with MessageRefID or DocRefID elements.
• AEOI portal now allows for corrections of uploads for 2014 and 2015 CDOT reports.

Formatting for CDOT Reporting: This section is in reference to CDOT reporting, excluding the ARR reporting. Reporting FI’s should submit their UK IGA reports electronically in XML using the IRS FATCA XML Schema v1.1 (the “IRS Schema”). While a majority of entries used in the IRS schema are applicable in the UK IGA, there are some which may lead to practical issues or raise certain questions.

• AcctHolderType:
  • The allowable entries detailed in the IRS schema for the AcctHolderType element are very specific to the US. For example:
    • FATCA101: Owner-Documented FI with specified US owner(s)
    • FATCA102: Passive NFFE with substantial US owner(s)
    • FATCA103: Non-participating FFI
    • FATCA104: Specified OS person
    • FATCA105: Direct reporting NFFE
• In order to accommodate UK reporting under this schema, the following existing US-specific entries can still be used, but are linked to a functional UK equivalent:
  • FATCA102: Passive Non-Financial Entity with substantial UK owner(s)
  • FATCA104: Specified UK person
  • As for FATCA101, FATCA103, and FATCA105, there is no functional UK equivalent and should not be used.
• SendingCompanyIN:
  • In accordance with HMRC guidance, the identifying number for reporting financial institutions should be the GIIN assigned by the IRS for FATCA purposes. If no GIIN has been assigned or obtained, then the HMRC-issued Unique Taxpayer Reference (UTR) should be used.
• TIN:
  • For CDOT purposes, using a TIN in the National Insurance Number (NINO) or Unique Taxpayer Reference (UTR) will be acceptable.
  • Jersey will also accept nine zeroes in the TIN element as allowed for FATCA purposes.
• MessageType:
  • For CDOT purposes, the MessageType element should be kept as FATCA, as the differentiation between FATCA and CDOT returns will be made at the point when reporting financial institutions upload their accounts to the portal.
• ReceivingCountry:
  • The ISO country code “GB” should be used for CDOT purposes.
• ResCountryCode:
  • Reporting financial institutions should include this data element in their UK IGA reports and use the ISO code “GB”.
• AccountNumber:
  • For FATCA purposes, reporting financial institutions may enter “NANUM” if there is no account number.

Other Known Issues: 2014 FATCA Returns: These may still be submitted through the AEOI online portal. The Comptroller of Taxes requires an explanation as to why the 2014 filing deadline was not met by the financial institution, and certain domestic regulatory penalties may apply. Sponsoring Financial Institution Returns: Separate returns must be filed for each sponsored entities. Click here to view all these practical guidance notes.  

Jersey Also Issues Updated Guidance Notes for FATCA and CDOT Reporting

Jersey recently released updated guidance notes for FATCA and CDOT reporting, which consisted of two major changes among a host of minor changes consisting of spelling and grammatical errors. The two major changes are as follows:

• Section 19.1.2, Custodial Accounts: The requirements for reporting from 2015 onward was expanded to include element K, which reads
  • K) The total gross amount of other income paid or credited to the account.

• Section 19.12, Transmission to the Jersey Competent Authority:
  • This section is expanded to include CDOT for registration related to the Jersey AEOI portal.
  • Regarding the Alternative Reporting Regime (ARR), it reminds users to utilize the ARR template issued by the Tax Office and upload it through the AEOI portal.
  • For US FATCA only, users must be registered with the IRS and use their GIIN to complete the registration process.
  • Removes a previous restriction on test file registration and testing.

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