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.

Switzerland signs declaration on introduction of AEOI with Canada and initiates consultation

On 5 February 2016, Switzerland announced (Link) that it had signed a joint declaration on the introduction of the automatic exchange of information (AEOI) in tax matters on a reciprocal basis with Canada. The two countries intend to start collecting data in accordance with the global AEOI standard in 2017, and commence this exchange of data in 2018, after the necessary legal basis has been established in both countries.

From a legal perspective, the automatic exchange of information with Canada will be implemented based on the Multilateral Competent Authority Agreement (“MCAA”) on the Automatic Exchange of Financial Account Information.

The Federal Council has authorized the Federal Department of Finance (FDF) to initiate a consultation on introducing the AEOI following the signing with Canada. Thereafter, the corresponding federal decrees will be submitted to Parliament for approval.

Estonian Parliament passes legislation in support of the DAC2

On 26 January 2016, the Estonian Parliament passed legislation obliging financial institutions to collect and report financial account information to the Tax and Customs Board on an annual basis. With the adoption of these amendments to the Tax Information Exchange Act and the Tax Organization Act, Estonia transposes the EU directive on automatic exchange of information in tax matters (Link) into local law. The Tax and Customs Board will share this information with Partner Jurisdictions on an annual basis, starting in 2017, based on the MCAA (Link) signed by then Finance Minister Jurgen Ligi in October 2015. The legislation applies retroactively beginning 1 January 2016, for certain obligations.

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