QI & FATCA News
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On August 27, 2010 the IRS has released Notice 2010-60. The notice provides initial guidance regarding the forthcoming regulations implementing the new FATCA withholding tax regime. Click here to download a copy of IRS Notice 2010-60.
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On March 18, 2010 President Obama signed into law job creation legislation which included the US tax reform provisions known as "FATCA." The FATCA provisions will take effect from January 1, 2013 however the full impact of the compliance burden of this leg-islation will not be clear until regulatory guidance is issued by the US tax authorities.
The main provision of FATCA is a new US withholding tax regime that requires non-US financial intermediaries to disclose financial information to the US tax authorities about their US clients or face a 30% withholding tax on the receipt of nearly all US source investment income and gross broker proceeds. These provisions will directly impact non-US banks and investment management firms, including QIs and non-QIs, as well as hedge funds and private equity funds.
QIs would be well advised to begin a FATCA implementa-tion plan immediately, even if the new rules will not take effect until 2013.
Click here to read QI Solutions' analysis of FATCA.- Details
On December 7, 2009, the US House of Representatives approved fiscal measures that re-introduced provisions of the Foreign Account Tax Compliance Act of 2009 ("FATCA"), originally introduced in the US House of Representatives and the US Senate in October 2009. Substantially all of the FATCA provisions are incorporated in the Tax Extenders Act of 2009, which is set to become effective in 2013.
The main provision of FATCA is a new US withholding tax regime that requires non-US financial intermediaries to disclose financial information to the US tax authorities about their US clients or face a 30% withholding tax on the receipt of nearly all US source investment income and gross broker proceeds.
Click here to read QI Solutions' analysis of the legislation approved by the US House of Representatives.
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QIs will have no choice but to endure more US compliance measures or completely leave the US capital markets
November 2009
On October 27, 2009, draft legislation titled the “Foreign Account Tax Compliance Act of 2009” (FATCA) was introduced in the US Congress. The draft law follows the recent tax scandals involving UBS and other non-US banks and is intended to crack-down on tax evasion by US persons through offshore accounts and is projected to raise US$8.5 billion in US tax revenue over the next ten years. These provisions, if enacted, will directly impact financial intermediaries that are Qualified Intermediaries (QI) as well as non-Qualified Intermediaries (NQI).
The FATCA provisions impacting QIs include:
- QIs will be required to enter into another agreement with the IRS, most likely with ‘QI audit’ style verification procedures
- Procedures will need to be implemented to identify all US clients, including US persons behind companies, partnerships and trusts
- QIs will be required to either disclose extensive financial information or perform full Form 1099 reporting for US clients
Click here to read QI Solutions' analysis of FATCA, or click here to download a copy of the draft Senate bill.
