CBDT issues clarification for FATCA & CRS implementation in India

On 19 February, the Indian revenue authorities issued a further clarification on the previous FATCA / CRS guidance, which provides details on the implementation of FATCA and CRS in India (Link).  The two page note covers specific questions raised by the industry since the December release of the revised Guidance Note (Link).

During 2015, the Indian revenue authorities had amended the Income-tax Rules, 1962 to introduce the system of Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) reporting in India (for the notified rules on FATCA reporting, you may refer to our news alert dated 11 August 2015), and subsequently, had released guidance note for the same on 31 August 2015.

On 31 December 2015, the Indian revenue authorities issued a more detailed guidance note on implementation of FATCA and CRS reporting requirements, to provide more clarity on the specific definitions and related implementation guidelines, with illustrative examples for the benefit of Indian Financial Institutions (for the highlights of the updated guidance note, you may refer to our news alert dated 07 January 2016).

For more information on this topic, see PwC India’s News Flash

CITT Compare Tool Update: Canada, India, Taiwan and Thailand added to the Tool in addition to multiple other updates

PwC’s CITT Compare Tool has been updated to include Canada (19 February 2016), India and Thailand ( 15 February 2016) and Taiwan (10 February 2016).  In addition, information has been revised to reflect recent regulatory news regarding Luxembourg and Germany (19 February 2016), Italy (10 February 2016), as well as China, Hungary and Germany (27 January 2016).  Please take this opportunity to re-run reports for those countries and use the latest information within your projects.

South African Revenue Service issues Briefing Note and Public Notice on CRS

On 19 February 2016, the South African Revenue Service issued a Public Notice (Link) and Briefing Note (Link) listing incidences of non-compliance in respect of the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters to be promulgated in Regulations under section 257 of the Tax Administration Act, 2011, that are subject to a fixed amount penalty under Chapter 15 of the Act.

Singapore reminds Reporting FIs of the upcoming deadline where alternative procedures were elected under the IGA

The Inland Revenue Authority of Singapore (IRAS) has released a reminder on its FATCA webpage (Link) on 11 February 2016.  The reminder is for Reporting SGFIs that have elected to use the alternative procedures for new accounts opened prior to the entry into force of the Singapore-US IGA (Link).  The one year period for applying the alternative due diligence procedures provided under Paragraph G.2 of Section VI of Annex I of the Singapore-US IGA for new accounts opened prior to the entry into force of the IGA will end on 17 March 2016.  Reporting SGFIs that have applied such procedures to accounts opened between 1 July 2014 and 17 March 2015 are reminded to collect the required self-certification and other documentation by 17 March 2016.  Reporting SGFIs that are unable to obtain the required documentation on such accounts by 17 March 2016 must:

  • close the accounts;
  • perform the applicable due diligence procedures on such closed accounts; and
  • report any closed account that is identified as a US reportable account or as an account held by an NPFFI to the IRAS by 31 May 2016.

U.S. signs Competent Authority Arrangements with Honduras and Italy

In mid-February 2016, the U.S. signed Competent Authority Arrangements (“CAAs”) with Honduras (Link) and Italy (Link) in accordance with the IGA signed between these jurisdictions (Link-Honduras) (Link-Italy). In general, a Competent Authority Arrangement is a bilateral agreement between the U.S. and a treaty partner to clarify or interpret treaty provisions (Link). These CAAs establish the procedures for the automatic exchange obligations and for the exchange of information between these jurisdictions.

Notice 2016-08 published with revisions

On 8 February 2016, Notice 2016-08 (Link) was published in the Internal Revenue Bullitin and includes two changes to the version which was made available on 19 January 2016. One change clarifies that the time permitted under the Notice for a participating FFI or reporting Model 2 FFI to provide its preexisting account certification includes the FFI’s certification that it did not have practices and procedures to assist account holders in the avoidance of chapter 4. The second change removes an incorrect reference to a registered deemed-compliant FFI in §1.1471-4(d)(2)(ii)(F) (as modified in a correcting amendment to this paragraph) with respect to the reporting of an account of a nonparticipating FFI that does not affect which FFIs are subject to this reporting or the exception to reporting provided in the Notice.

PATH Act includes important information reporting and withholding provisions

The centerpiece of the Protecting Americans from Tax Hikes Act (the PATH Act), enacted at the end of 2015, was to make certain tax provisions permanent and to extend a number of temporary provisions for five and two years. However, the PATH Act did include a number of important information reporting and withholding provisions, including modified due dates for employee wage information and nonemployee compensation filings and a new safe harbor rule for de minimis errors on information returns, payee statements, and withholding. The modified due dates ensure that information is available to the IRS sooner, while the new safe harbor provisions reduce administrative burdens on payors.

The Act also modifies the application of the Foreign Investment in Real Property Tax Act (FIRPTA), including an increase in the withholding rate on dispositions of U.S. real property interests and modifications to rules applicable to investments in real estate investment trusts and regulated investment companies (RICs). For more information on the FIRPTA provisions, see the PwC Insight: New modifications to FIRPTA.

For a full discussion of the PATH Act see the PwC Insight: House approves major tax extender package with permanent, five-year, and two-year extension provisions.

For more information on these updates, please see the full PwC Tax Insights

U.S. signs a Competent Authority Arrangement with Costa Rica

In February 2016, the U.S. signed a Competent Authority Arrangement (“CAA”) with Costa Rica (Link) in accordance with the IGA signed between these jurisdictions (Link). In general, a Competent Authority Arrangement is a bilateral agreement between the U.S. and a treaty partner to clarify or interpret treaty provisions (Link). These CAAs establish the procedures for the automatic exchange obligations and for the exchange of information between these jurisdictions.

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