FATCA – Extension of registration

IRS extends registration deadline to 5 May 2014

The U.S. Internal Revenue Service (IRS) has just issued a 10-day extension to the initial 25 April 2014 deadline for Foreign Financial Institutions (“FFI”) to complete their FATCA registration and receive their Global Intermediary Identification Number (“GIIN”).

FFIs now have until 5 May 2014 to complete FATCA registration on the IRS online portal. If they do so, they will still appear on the first list of GIINs (to be published on 2 June 2014) and they will not suffer any penalties.

As it had been previously informed by our law firm, FFIs that fail to comply with FATCA will be listed as non-participating financial institutions and will be subject to a 30 percent withholding tax.


Upcoming Training and Informative Sessions

In furtherance of the informative sessions/courses we have carried out in Montevideo (on 11 and 12 March), we will be speaking at an event organized by the MerVal in Buenos Aires (8 April) as well as at a Webinar which targets the whole region and has been organized by the “Organización de Especialistas Certificados en Delitos Económicos”. This webinar will take place on 11 April.


What is FATCA?

FATCA was enacted by the Government of the U.S. with the purpose of obtaining tools necessary to combat tax evasion by U.S. Persons.

One way to provide for the above was defined upon the requirement for FFIs - including banks, brokers, investment funds, fund managers, custodians, etc. - to subscribe agreements with the IRS to submit information on financial accounts held directly or indirectly by U.S. Persons.

By creating such information regime, FATCA would increase transparency for the IRS in what concerns U.S. Persons investing, earning income or holding financial assets through non-U.S. financial institutions. This, of course enables U.S. authorities to identify and collect relevant taxes from US Persons.

All FFIs non-compliant with the requirement to provide information are subject to a 30% withholding tax on payments they receive from U.S. sources.

This withholding tax is applicable to various types of payments, including payments originating in interest, dividends, premiums, annuities, etc., and the gross income resulting from the sale or conveyance of property liable of generating interest.

All U.S. financial institutions acting as withholding agents will be responsible for determining whether an FFI or an NFFE (as per the definitions herein below) is to be considered for withholding purposes or not upon consideration of payments/disbursements made. Likewise, an FFI could also be classified as a withholding agent with respect to other FFIs, or capable of determining withholdings applicable to pass- through payments.

Posted on April 17, 2014 .