The U.S. deadline for reporting financial information on accounts in foreign financial institutions is Sept. 30. Some foreign governments and financial institutions are in varying states of readiness (or lack thereof) as they attempt to comply.
The reporting is per the Foreign Account Tax Compliance Act. FATCA requires foreign financial institutions to report certain information on accounts belonging to U.S. citizens. For individual accounts, the minimum balance required for those institutions to report is $50,000. For entities with a majority controlling ownership by a U.S. citizen, the minimum balance is $250,000
The information those financial institutions are required to turn over include identities, Tax Identification Numbers, addresses and account balances.
“Some countries may struggle to meet the FATCA reporting deadline.”
But some countries may struggle to meet the deadline.
Setting up electronic portals
The Republic of Seychelles, a small island country off Africa’s East Coast, gave its financial institutions a June 30 deadline to have a digital file with the pertinent account information on it.
The country’s government announced that its electronic portal, which serves as the repository of information from financial institutions, went live July 31, reported Tax-News. However, even though the portal is live, the government said it cannot accept information from financial institutions yet.
The Seychelles government has instructed institutions to continue compiling account information and have it ready.
Jamaica’s IGA with the U.S. went into effect May 1, 2014. The Gleaner, a Jamaican news organization, reported on Aug. 7 that several financial institutions were working with the country’s tax administration to test its electronic portal. The institutions were submitting data to see how ready the portal was.
Jamaica’s government has given its financial institutions until Aug. 31 to turn over its information on U.S. account holders so that it may be able to turn the information over by Sept. 30.
“India will take a simultaneous approach to complying with FATCA and CRS.”
India takes different approach
India signed its FATCA agreement with the U.S. on July 9, 2015. But it also signed an agreement to comply with the Common Reporting Standard from the Organization for Economic Cooperation and Development. The Hindu Business Line reported that India is one of the few countries that will take a simultaneous approach to complying with both. Most other countries would meet obligations of FATCA, then CRS.
The two are similar in that they seek to ensure that assets aren’t being hidden abroad by account holders to avoid paying taxes on them. But they have notable differences. Perhaps the most significant difference is CRS has no minimum balance on reportable accounts, so there will be more to report on.
Even though India signed its FATCA agreement in July, the government expects that its financial institutions will be able to meet the Sept. 30 deadline, The Hindu Business Line reported. Indian financial institutions have until Sept. 10 to gather their information and present it to the Indian government. The government will then turn the information over to the U.S. by Sept. 30. The U.S. in turn, is expected to hand over account information on Indian citizens who have accounts in the U.S.
If countries who have signed intergovernmental agreements with the U.S. fail to comply with FATCA, they will face a 30 percent withholding tax on certain payments of U.S.-sourced income.
