Bulgaria publishes Information on the AEOI implementation

On 21 December 2018, the Bulgarian Government released updated Information on the implementation of the Automatic Exchange of Information (“AEOI”) in Bulgaria (Link-Bulgarian).This document provides certain information regarding the Common Reporting Standard (“CRS”) and Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (“DAC2”).

Australia announces updates to FATCA reporting procedure

On 14 January 2019, the Australian Taxation Office (“ATO”) issued an update to the Foreign Account Tax Compliance Act (“FATCA”) reporting process (Link). The update refers to the following items:

Wrapper headers

From 1 January 2019, all FATCA reports must be lodged with wrapper header information. Existing functionality enabling lodgment of reports without a wrapper header will be maintained until 31 March 2019. For more information on the wrapper headers one can visit the Software developers FATCA webpage (Link).

Restricted characters

Certain characters are prohibited and may not be included in a FATCA report and if present will return an IRS error – NTD.  The NTD error is a ‘Failed threat detection’, which means that restricted characters have been detected within the report.

The DocRefId must not include any non-alphanumeric characters. There are two exceptions to the rule, periods (.) and dashes (-) can be used. All other non-alphanumeric characters cannot be used. Some examples of non-alphanumeric characters that must not be included in the DocRefId are:

  • underscore (_)
  • at symbol (@)
  • plus (+)
  • ampersand (&)
  • exclamation mark (!)
  • asterisk (*).

If a report has a string “ ‘AND or ‘OR’ “ (e.g. apostrophe AND or apostrophe OR) the IRS will reject the report with an NTD error.  This may occur in account holder names or addresses for example:

  • <LastName>D’ANDREA</LastName>
  • <sfa:FirstName>L’OREAL GREER</sfa:FirstName>
  • <sfa:AddressFree>&apos;ORCADIA&apos; HASTINGS RD TERRIGAL NSW 2260</sfa:AddressFree>

ATO suggest the best way to avoid the NTD – Failed threat detection error is to remove the apostrophe all together (using neither the actual character nor the entity reference as defined in the FATCA XML Schema Best Practices for FORM 8966).

In addition, one can subscribe to receive e-mail alerts from the ATO when new information regarding FATCA reporting are released, by e-mailing ato-dmi@ato.gov.au.

IRS releases Filing Season Shutdown Contingency Plan

On 15 January 2019, the U.S. Internal Revenue Service (“IRS”) released “Fiscal Year 2019 Lapsed Appropriation Contingency Plan” for the Tax Year 2018 Filing Season to clarify the actions and activities for the first five (5) business days following a lapse in appropriations. The plan also includes rules for reporting under the Foreign Account Tax Compliance Act (“FATCA”) (Link).

This plan is developed for implementation during a lapse in annual appropriations to comply with the requirements of the Anti-Deficiency Act, 31 U.S.C. §§ 1341 and 1342. The Act prohibits agencies from obligating funds exceeding, or in advance of, appropriations and from employing personnel during a lapse in appropriations except as described in the plan. During a lapse, the IRS may continue certain activities that fall under established exceptions to the Anti-Deficiency Act. Employees may be designated as excepted only to perform work directly associated with those activities, and only for time necessary to complete that work. For example, if an employee is needed for three hours per week to safeguard revenue arriving by mail, the employee should be instructed to report to work only for those three hours. (In some cases, an excepted employee may need to remain in the office during an interval between the performance of excepted functions; in that situation, and only in that situation, an excepted employee may perform non-excepted functions during the shutdown.)

Taiwan updates Q&A on CRS

On 7 January 2019, the Taiwan Ministry of Finance published updated Questions and Answers (“Q&A”) on the implementation of the Common Reporting Standard (“CRS”) (Link-Chinese). Questions on what CRS is, how it works and how Taiwan will keep up with the CRS implementation are answered in downloadable files.

Guernsey publishes Bulletin regarding CRS

On 27 December 2018, Guernsey published “Reportable and Participating Jurisdictions for Reporting Period 2018/2019 Bulletin” (“Bulletin 2018/3” or “The Bulletin”) regarding the Common Reporting Standard (“CRS”) (Link). The Bulletin was issued by the Director of the Revenue Service (“the Director”) under the provisions of Regulation 12 of “The Income Tax Regulations, 2015” (“The CRS Regulations”) (Link).

The purpose of this bulletin is to confirm the following:

  • the provisional Reportable Jurisdictions for the CRS 2018 Reportable Period (1 January – 31 December 2018, inclusive);
  • the provisional Reportable Jurisdictions for the CRS 2019 Reportable Period (1 January – 31 December 2019, inclusive);
  • the revised Participating Jurisdictions list; and,
  • the jurisdictions to which the Director sent information in relation to 2017 CRS data.

The Bulletin supersedes any previous Reportable and Participating Jurisdiction Lists published by the Director.

In addition, and according to the Bulletin, an Information Gateway Reporter (“IGOR”) User Guide for CRS and the Foreign Account Tax Compliance Act (“FATCA”) has been created to provide IGOR users with further assistance with the respective reporting. This user guide is available to download at the Guernsey Government’s website (Link).

Turkey signs Competent Authority Agreements with Latvia and Norway

On 30 December 2018, Turkey released the text of the Competent Authority Agreements (“CAA”) between itself and Latvia, and itself and Norway in the Official Gazette (Link). The CAA between Turkey and Latvia was signed in Ankara and Riga on 20 December 2018, and the CAA between Turkey and Norway was signed in Oslo on 20 December 2018 and in Ankara on 21 December 2018.

These agreements form the basis of the automatic exchange of information (“AEOI”) between Turkey and these nations under the Common Reporting Standard.

PwC Tax Insights: IRS proposed Regulations Reducing Burden under FATCA and Chapter 3

As previously reported (Link-Blog), on 13 December 2018, the U.S. Internal Revenue Service (“IRS”) released “Issue 2018-17” to clarify the recent publication of proposed regulations reducing burden under the Foreign Account Tax Compliance Act (“FATCA”) and Chapter 3. The IRS and the Department of the Treasury are issuing proposed regulations (Link) under sections 1441, 1461, 1471, 1472, 1473, and 1474 of the Internal Revenue Code (“Code”).

Among numerous provisions in the Proposed Regulations, the modification of the so-called ‘lag method’ of withholding and reporting on a U.S. partnership’s undistributed income and adjustments to overwithholding under the reimbursement and set-off procedures would seem to have the most significant impact, especially on the asset management industry.

Other notable provisions in the Proposed Regulations include:

  • Elimination of FATCA withholding on both payments of gross proceeds and certain insurance payments;
  • Deferral of FATCA withholding on foreign passthru payments;
  • Guidance concerning certain due diligence requirements of withholding agents;
  • Clarification of the concept of ‘investment entity’ in the context of determining whether an entity is a ‘financial institution’ for FATCA purposes; and,
  • Modification of non-qualified intermediaries’ reporting of amounts withheld under FATCA.

To provide more detailed information on this topic, PwC in the U.S. released a Tax Insights on 7 January 2019 (Link).

Liechtenstein releases updated CRS reporting instructions and Newsletter on FATCA and CRS

On 4 December 2018, the Liechtenstein Tax Authority released an updated version of the “Anleitung AIA Reporting (CRS)”, which represents reporting instructions regarding the Common Reporting Standard (Link-German).

Furthermore, on 21 December 2018, the Liechtenstein Tax Authority released “Newsletter 5/2018” (“Newsletter”). This newsletter provides information on the recent changes in the Liechtenstein Automatic Exchange of Information (“AEOI”) legislation regarding the Foreign Account Tax Compliance Act (“FATCA”) and the Common Reporting Standard (“CRS”) (Link-German).

Changes described in the Newsletter concern the following items (Link-German):

  • Extension of the list of AEOI partner jurisdictions;
  • Annulment of the list of AEOI participating jurisdictions and a provision stating that participating jurisdictions are considered partner jurisdictions; and,
  • Classification of a non-profit legal entity being rated as an active non-financial entity.

Consequently, the Automatic Exchange of Information leaflet (“AIA Merkblatt”) was updated on the same day to cover the above-mentioned changes (Link-German).

More information on the AEOI in Liechtenstein can be found on the FATCA (Link-German) and the CRS (Link-German) website of the Liechtenstein Tax Authority.