The complexity and the length of Inter-Governmental Agreement (IGA) negotiations between the US and the FATCA cooperating jurisdictions led to considerable delays in concluding such agreements. As a result, various stakeholders expressed their concerns that the 5 May 2014 deadline for FATCA registration could not have been met.
In response to these concerns, on 2 April 2014, the US Treasury and the Internal Revenue Service (IRS) announced that they will treat a jurisdiction as having an IGA “in- effect”, provided that before 1 July 2014, the jurisdiction has reached an agreement in substance with the United States on the terms of the IGA and the jurisdiction has expressly consented to be included in the US Treasury’s “in-effect” list, even if the agreement is yet to be officially signed.
With regards to Cyprus, a Model 1 IGA between the US and Cyprus, is treated to be “in-effect” by the US Treasury and the IRS as of 22 April 2014. The US and Cyprus governments have reached an agreement in substance in relation to the terms of the agreement and Cyprus has expressly consented to be included in the relevant “in-effect” list. It should be noted that the text of the IGA has not yet been published.
It follows that Foreign Financial Institutions (FFIs) that are resident in Cyprus are now allowed to register on the IRS FATCA website until 31 December 2014.
Despite the extension of the FATCA registration deadline, it is recommended that Cyprus FFIs, which are under an obligation to register for FATCA purposes, should proceed with registering themselves and receive a Global Intermediary Identification Number (GIIN). The issuance of a GIIN will allow the Cyprus FFIs to demonstrate FATCA compliance to their international business counterparties.
KPMG Cyprus and its international network are in a position to assist and advise clients throughout all the steps of the FATCA registration process.