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OECD releases Consultation Document

On 19 February 2020, the Organisation for Economic Cooperation and Development (“OECD”) published a Consultation Document seeking input on draft Model Rules for Reporting for Platform Operators with respect to Sellers in the Sharing and Gig Economy (Link).

Interested parties are invited to send their comments no later than Friday, 20 March 2020, 18:00 (CET) by email to taxpublicconsultation@oecd.org in Word format (in order to facilitate their distribution to government officials). All comments should be addressed to the International Co-operation and Tax Administration Division, Centre for Tax Policy and Administration. Comments in excess of ten pages should attach an executive summary limited to two pages.

IRS updates FAQ on FATCA

On 18 February 2020, U.S. Internal Revenue Service (“IRS”) updated its Frequently Asked Questions (“FAQs”) – General on the Foreign Account Tax Compliance Act (“FATCA”) (Link).

Question 23 in the section “General Compliance” has been updated to support users in understanding the respective requirements:

Question 23: For the 2017, 2018 and 2019 calendar years, will a withholding agent be subjected to interest, penalties, or additions to tax for failing to withhold and report by March 15 of the subsequent year, on a payment of a dividend equivalent made with respect to a derivative referencing a partnership?

Answer 23: For the 2017, 2018, and 2019 calendar years, a withholding agent will not be subject to interest, penalties, or additions to tax with respect to a dividend equivalent payment made with respect to a derivative referencing a partnership provided that the withholding agent withholds and reports on Form 1042 and Form 1042-S with respect to the payment by September 17, 2018 (for the 2017 calendar year), September 16, 2019 (for the 2018 calendar year), or September 15, 2020 (for the 2019 calendar year). In a case in which a withholding agent withholds after March 15 of the subsequent year, the withholding agent should file a Form 1042 (if the dividend equivalent payments are the only payments reportable for the year) or an amended Form 1042 by September 17, 2018, September 16, 2019, or September 15, 2020 (as applicable), and write “Dividend Equivalent—Partnership” in the top center portion of the 2017, 2018, or 2019 Form 1042. The withholding agent should also file Form(s) 1042-S or amended Form(s) 1042-S by the applicable date noted above with respect to the dividend equivalent payment.  Finally, when depositing the tax withheld for a dividend equivalent payment made in 2017, 2018 or 2019, the withholding agent must designate the payment as being made for the applicable calendar year in accordance with the instructions to Form 1042.

HMRC publishes update to International Exchange of Information Manual

On 11, 12 and 13 February 2020, Her Majesty’s Revenue & Customs (“HMRC”) published updates to the International Exchange of Information Manual (Link). In addition to several formatting changes, the primary updates were made within the following sections:

Notification requirement: Advice or services provided to staff (Link):

  • Page archived.

Notification requirement: Specified Financial Institutions: Contents (Link):

  • Links to pages ieim601010 – ieim601050 archived
  • Page archived.

Notification requirement: Scope and requirements:  Specified Financial Institution (Link):

  • Archiving reason text added.

Notification requirement: Scope and requirements: When to send a notification (Link):

  • Page archived.

Notification requirement: Scope and requirements: Contents (Link):

  • Archiving reason text added.

Notifying clients about the Common Reporting Standard and related matters: Contents (Link):

  • Links to 600110, 600120 and 600130 archived
  • Archiving reason text added

Notification requirement: Flowcharts: Contents (Link):

  • Archiving reason text added

Automatic exchange of financial accounts information (Link):

  • Auto alias reset

Notification requirement: Meaning of offshore advice or services: contents (Link):

  • Links to pages IEIM603010, IEIM603010, IEIM603030, IEIM603040, IEIM603050 archived.
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Notification requirement: Flowcharts: Contents (Link):

  • Links to pages IEIM605020 and IEIM605030 archived.
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Notification requirement: Advice or services provided to staff (Link):

  • Link to page 604010 archived.

Exchange of information: Introduction (Link):

  • URL reset
  • URL alias reset

Automatic exchange of financial accounts information (Link):

  • URL alias reset

Russia updates information on CRS reporting

On 13 February 2020, Russia updated information on the Common Reporting Standard (“CRS”) reporting in the section “Legislation, forms and formats, clarifications” (Link-Russian).

In addition, also on 13 February 2020, the section “Rules of Reporting – new reporting rules for financial market organizations” has been updated.

Singapore announces changes to CRS reporting requirements

On 11 February 2020, the Inland Revenue Authority of Singapore (“IRAS”) released the following documents:

  • List of Reportable Jurisdictions for 2019 CRS reporting (Link)
  • List of Participating Jurisdictions (Link)

Reporting SGFIs are to submit 2019 Common Reporting Standard (“CRS”) information by 31 May 2020. The updated list of Participating Jurisdictions will take effect from 12 February 2020.

In addition, also on 11 February 2020, IRAS announced that the CRS registration deadline for an entity that became a Reporting Singapore Financial Institution (“SGFI”) between 1 January 2019 and 31 December 2019 (both dates inclusive) is 31 March 2020. Such Reporting SGFIs are reminded to apply for CRS registration by 31 March 2020. One can apply for CRS registration on the IRAS CRS Registration e-service website (Link). A failure to comply with this registration requirement is an offence under the CRS Regulations.

OECD updates list of activated Exchange Relationships under CRS

On 2 February 2020, the Organisation for Economic Co-operation and Development (“OECD”) updated the list of activated Exchange Relationships under the Common Reporting Standard (“CRS”) (Link).

As of February 2020, there are over 4,000 bilateral exchange relationships activated with respect to more than 100 jurisdictions committed to the CRS, with next exchanges between these jurisdictions set to take place at the end of September 2020.

GAO recommends applying FATCA for virtual currencies

On 12 February 2020, the U.S. Government Accountability Office (“GAO”) released “Virtual Currencies: Additional Information Reporting and Clarified Guidance Could Improve Tax Compliance” (Link). The GAO is an independent, nonpartisan agency that examines for Congress how taxpayer dollars are spent and provides Congress and federal agencies with objective, reliable information to help the government save money and work more efficiently.

Inter alia, GAO recommended the U.S. Internal Revenue Service (“IRS”) to clarify the application of reporting requirements under FATCA to virtual currency. Without information about how to interpret and apply FATCA requirements to situations involving virtual currency, taxpayers will not know whether they are required to report virtual currency held outside the United States. As a result, they may be underreporting, depriving IRS of data needed to address offshore tax evasion, or overreporting by filing forms that are not required. As we have previously reported, such overreporting creates unnecessary burdens, including financial costs, for taxpayers.

IRS issues reminder on Due Date for Selection of Certification Periodic Review Year

On 11 February 2020, the U.S. Internal Revenue Service (“IRS”) released issue number 2020 – 01 on the Due Date for Selection of Certification Periodic Review Year on Qualified Intermediaries (“QI”), Withholding Foreign Partnerships (“WP”) and Withholding Foreign Trusts (“WT”) Application and Account Management System (Link) with the following update:

“All QI/WP/WT entities with a certification due date of 1 July 2020, which includes entities with an effective date later than 1 January 2016 and earlier than 2 January 2017, must select the periodic review year of their certification period by 1 July 2020. This includes those entities selecting 2019 as their periodic review year. This announcement does not apply to termination certifications.

If a QI/WP/WT entity is applying for a waiver of the periodic review when making its periodic certification, it must select 2017 for its periodic review year, complete Parts I, II, and III of the certification and submit its waiver application by 1 July 2020. However, the entity will not be required to perform a periodic review if its waiver application is approved.

The IRS will notify the entity when a request for a waiver of the periodic review is approved or denied.  If such request is denied with less than six months remaining before the certification due date, including any extensions, the entity will be granted a six month extension from the date of denial of the waiver to complete the periodic review and resubmit the certification. At that time, if the entity wants to select a year other than 2017 as its periodic review year, the entity should contact the FI Team at lbi.fi.qiwpissues@irs.gov. The resubmitted certification should include a completed Part IV and Part VI (if applicable).

QI/WP/WT entities should consult Publication 5262, Qualified Intermediary, Withholding Foreign Partnership, and Withholding Foreign Trust Application & Account Management User Guide (Link) before beginning their certification on the system to verify that their account login credentials are up-to-date and for login assistance, if needed. QI/WP/WT entities should also consult the IRS FAQs for Qualified Intermediaries, Withholding Foreign Partnerships, and Withholding Foreign Trusts under the heading Certifications and Periodic Reviews (Link).

Please ensure that all filings (including Forms 1042 (Link), 1042-S (Link), 945 (Link), 1099 (Link) and 8966 (Link)) and related payments are up-to-date.”

IRS updates FAQs on QI/WP/WT

On 11 February 2020, the U.S. Internal Revenue Service (“IRS”) released issue number 2020 – 02 updating its Frequently Asked Questions (“FAQs”) on Qualified Intermediaries (“QI”), Withholding Foreign Partnerships (“WP”) and Withholding Foreign Trusts (“WT”) (Link).

Question 9 and 10 in the section “Certifications and Periodic Reviews” have been updated to support users in understanding the respective requirements.

Please note that the initial issue number 2020 – 02 from 11 February 2020 included FAQ 18. The IRS corrected this issue and released a second issue number 2020 – 02 on 12 February 2020 stating, that FAQ 18 has been removed. The accidentally released FAQ 18 contained the same information as issue number 2020 – 01 (see News X), but with a wrong deadline.

Question 9: When is the deadline for QI/WP/WT entities to select the periodic review year of their certification?

Answer 9: All QI/WP/WT entities must select the periodic review year of their certification period before July 1, 2020. This includes those entities selecting 2019 as their periodic review year.

If a QI/WP/WT entity is applying for a waiver of the periodic review when making its periodic certification, it must select 2017 for its periodic review year, complete Parts I, II, and III of the certification, and submit its waiver application before July 1, 2020. However, the entity will not be required to perform a periodic review if its waiver application is approved.

The IRS will notify the entity when a request for a waiver of the periodic review is approved or denied. If such request is denied with less than 6 months remaining before the certification due date, including any extensions, the entity will be granted a six-month extension from the date of denial of the waiver to complete the periodic review and resubmit the certification. At that time, the entity may select a year other than 2017 as its periodic review year. If the entity encounters difficulty selecting a year other than 2017, the entity should contact the FI Team at lbi.fi.qiwpissues@irs.gov. The resubmitted certification should include a completed Part IV and Part VI (if applicable).

Question 10: When are the due dates for submissions of QI/WP/WT Certifications covering a 3 full calendar year certification period ending 31 December 2019?

Answer 10: The certification due date depends on which year the QI/WP/WT selected for its periodic review, and whether the QI/WP/WT is applying for a waiver of the periodic review requirement with its periodic certification (waiver application). According to section 10.03 of the QI Agreement (QI Agreement) and section 8.03 of the WP Agreement and WT Agreement, the certification due date for a QI/WP/WT that selected 2017 or 2018 for its periodic review and that has a certification period ending December 31, 2019 is July 1, 2020.

According to those same sections noted above, the certification due date for a QI/WP/WT that selected 2019 for its periodic review is December 31, 2020.

If a QI/WP/WT entity is applying for a waiver of the periodic review when making its periodic certification, it must select 2017 for its periodic review year, complete Parts I, II, and III of the certification and submit its waiver application by July 1, 2020. However, the entity will not be required to perform a periodic review if its waiver application is approved.

The IRS will notify the entity when a request for a waiver of the periodic review is approved or denied. If such request is denied with less than six months remaining before the certification due date, including any extensions, the entity will be granted a six-month extension from the date of denial of the waiver to complete the periodic review and resubmit the certification. At that time, the entity may select a year other than 2017 as its periodic review year. If the entity encounters difficulty selecting a year other than 2017, the entity should contact the FI Team at lbi.fi.qiwpissues@irs.gov.  Following completion of the periodic review, the QI/WP/WT’s resubmitted certification should include a completed Part IV and Part VI (if applicable).

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