IRS releases new FATCA International Compliance Management Model (ICMM)

On 8 August 2015, the IRS issued an updated version of FATCA International Compliance Management Model (ICMM). The new ICMM validates record-level processing of FATCA 8966 XML files, including report files submitted before 8 August to correct two known errors regarding “Account Holder Type Not Valid” and “Pooled Reporting Type Not Populated”.

Based on the guidance, no response is required by the filer to the abovementioned error messages. The IRS will correct and send notifications for concerned files.

Additional information on this issue can be found under the “Q1” and “Q2” references of the “Field Level Errors” category of the Frequently Asked Questions (FAQs) (Link).

The Reserve Bank of India issues circular on FATCA Reporting requirements

On 28 August, the Reserve Bank of India (“RBI”), India’s Central Bank, issued a circular inviting financial institutions to comply with FATCA reporting requirements (Link). The circular includes clarifications on the date of enforcement of the IGA (31 August 2015), the identification of reportable accounts and the alternate procedure for their identification, the due diligence procedures, the treatment of new accounts (opened after 1 September 2015) and the control framework. The circular also states that a detailed guidance note is under preparation by the Central Board of Direct Taxes (“CBDT”).

Cayman Authorities notify portal users of Cayman AEOI Portal closure on 28 August

On 25 August 2015, the Cayman Department for International Tax Cooperation (“DITC”) notified AEOI portal users (Link) that it is in the final stages of preparing the US FATCA data to be provided to the IRS. Accordingly, it intends to close the Cayman AEOI Portal after 17:00EST on 28 August 2015.  It further instructed that all return entries that are not completed and have the status of “No Data”, “Ready to Submit” or “In Draft” should be reviewed, finalized and submitted, or they should be removed from the AEOI Portal.  DITC noted that it has taken a “soft approach to enforcement of 2014 US FATCA data reported this year but cannot guarantee that late submissions will be accepted beyond 5:00pm (EST) on 28th August 2015”.

For those returns which have been submitted and accepted but which need to be amended, DITC recommends using the “Amended Data” Return entry and following the below steps as guidance (either option A or B):

  • Login to the AEOI Portal with your credentials and select the Financial Institution you wish to enter further information for.
  • Navigate to “Manage Returns”, select “Create Return”.
  • Enter a Return Name, select the Return type that you wish to complete and enter the period end date.

A.  If the Return type selected is “US FATCA XML Upload”, please refer to the FATCA XML v1.1 User Guide, .

B.  If the Return type selected is “US FATCA Manual Entry”, please complete the mandatory fields with the red asterisk (*) and input the correct information in their respective fields that was incorrectly entered.

Finally, the DITC confirmed the nil returns are not mandatory.

FATCA FAQs updated regarding registration requirements

On 25 August 2015, the IRS updated its FATCA FAQs (Link) to amend questions Q2 and Q3 while adding Q5 under the heading “Branches/Disregarded Entity.” According to these FAQs, a branch of an FI should be registered as a branch of its owner and not as a separate entity.  Q5 explains how to remediate a branch’s registration status if it incorrectly registered as a separate entity rather than as a branch.  Branches that need to revise their registration status must do so before the end of 2015.  Q5 also describes consequences to a withholding agent that has received a Form W-8BEN-E from a branch that has incorrectly registered as a separate entity.  According to Q5, a withholding agent may rely on a Form W-8BEN-E if it knows or has reason to know that the form has been provided by a branch of an FI that has incorrectly registered as a separate entity until the end of 2015 (assuming the form is otherwise valid).  Please refer to the recent alert (PwC Tax Insight) regarding changes to the FATCA Online Registration System (Link to post).

Luxembourg Draft bill on transposition of DAC and MCAA submitted to Parliament

On 14 August 2015, a Draft bill (n° 6858) concerning the automatic exchange of financial account information in the field of taxation was submitted to the Luxembourg Parliament (Link – French). More precisely, this Draft bill addresses the transposition of Directive 2014/107/EU (Amending the EU Savings Directive to incorporate CRS), the ratification of the MCAA signed on 29 October 2014, in Berlin, and the modification of the Law of 29 March 2013, on the administrative cooperation in the field of taxation. This Draft bill, once accepted by the Parliament, will transpose the Standard for the Automatic Exchange of Information into Luxembourg law and will apply from 1 January 2016.

PwC Webcast: Managing uncertainty around customer and investor tax transparency initiatives

On 8 September 2015, PwC will be hosting a one-hour Webcast (Link to Registration) starting at 9:00EST/ 14:00BST / 15:00CET on the topic of:

Managing uncertainty around the Common Reporting Standard (CRS) and the recent consultation documents on tackling tax evasion in the UK.

The objective of this webcast is to provide participants with important information regarding CRS, including the revised Directive on Administrative Cooperation (DAC) to support their organisations in being prepared for the 1 January 2016 go-live date in the UK.

Outstanding questions and uncertainty on implementation of CRS and DAC in the UK

We expect that HMRC soon will release draft Guidance on CRS and DAC and we have already begun to see evolving guidance in other jurisdictions; however, at present financial institutions are principally implementing the OECD Commentary to the Competent Authority Agreement (CAA) published in July 2014. The lack of local regulation and guidance to confirm how FATCA guidance interacts with CRS has left important questions about how to proceed unanswered.

Chris Orchard from HMRC will join Neil Higgins from PwC to discuss the UK approach to implementing CRS.

Discussions regarding the proposed corporate criminal offence of failure to prevent tax evasion

HMRC has issued a series of consultation documents regarding further measures to tackle offshore tax evasion, including a proposed new corporate criminal offence of failure to prevent tax evasion.

Under this corporate offence, corporations may need to demonstrate that they have taken reasonable steps to prevent their employees or agents from facilitating tax evasion.  This proposed offence could be relevant to any organisation with private clients, including banks, trust companies, insurers and asset managers.

Philippa Madelin from HMRC and Anthony Whatling from PwC will discuss the background and possible implications of these proposed offences, and will look to address the following questions:

  • Are further measures necessary given the onset of Automatic Exchange of Information to prevent offshore tax evasion?
  • If the corporate criminal offence is enacted, what kinds of “reasonable steps” would HMRC expect organisations to take?

Click on the following link to open the webcast registration page:

Pre-registration is available and encouraged.

**You may log in starting 15 minutes before the webcast begins.

FATCA Online Registration System: Sponsoring entity financial institutions can register and obtain GIINs for sponsored entities

The Internal Revenue Service (IRS) on 20 August 2015, updated its website with information about a new feature that will allow sponsoring entity financial institutions to add sponsored entities to the Foreign Account Tax Compliance Act (FATCA) Online Registration System (Link) and obtain a global intermediary identification number (GIIN) for each sponsored entity.

Read more in our PwC Tax Insight

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