FATCA e-alert Issue 2014-17

FATCA e-alert Issue 2014-17

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Updated versions of Model IGAs

On 9 June, the Treasury Department posted the following updated versions of the Model 1 and Model 2 intergovernmental agreements (IGAs) on the FATCA webpage.

Model 1 IGA reached “in substance” with Barbados and Bulgaria

Model 1 IGA reached “in substance” with Barbados

On 30 May, the U.S. Treasury Department updated its FATCA webpage to report that Barbados reached an “agreement in substance” for a Model 1 intergovernmental agreement (IGA) with the United States and consented to this status as of 27 May 2014.

In early April 2014, the IRS and Treasury Department announced that foreign financial institutions (FFIs) located in a jurisdiction that has reached an “agreement in substance” with the United States, under the FATCA regime, will be treated as having an agreement in effect until the end of 2014.

 

Bulgaria - Review of FATCA “agreement in substance”

Representatives of the Governments of Bulgaria and the United States in late April 2014 reached an intergovernmental agreement (IGA) “in substance” under the FATCA regime, with Bulgaria consenting to being included as a jurisdiction under the Model 1 IGA list as of 23 April 2014.

Read a May 2014 report (PDF, 216 KB) prepared by the KPMG member firm in Bulgaria.

Under U.S. guidance issued in early April 2014, foreign financial institutions (FFIs) located in a jurisdiction that has reached an “agreement in substance” with the United States, under the FATCA regime, will be treated as having an agreement in effect until the end of 2014.

Korea - Effects of FATCA agreement

Representatives of the Governments of South Korea and the United States in early April 2014 reached an intergovernmental agreement (IGA) “in substance” under the FATCA regime.

The Korean Tax Authority originally had expected a FATCA agreement to be concluded by the end of May 2014, at the earliest, with the agreement to then enter into force beginning in July 2014, after release of the legislative notice.

With consent to a Model 1 “agreement in substance” - see the U.S. Treasury website - it is now expected that there will be the exchange of tax information, between Korea and the United States on an annual basis.

In addition, U.S. persons that have established in Korea a financial account of $50,000 or more (individuals) and $250,000 or more (corporations) will be subject to this provision. Conversely, the Korean Tax Authority will be able to obtain account information of Korean persons that have established accounts in the United States and earned a threshold amount of income annually.

Read a May 2014 report prepared by the KPMG member firm in Korea: Tax Brief (May 2014)

IGA signed with Slovenia, and reached “in substance” with Seychelles, Turkey and Turkmenistan

The U.S. Treasury Department updated its FATCA webpage to include text of a recently signed intergovernmental agreement (IGA) between the United States and Slovenia. Treasury reports that the IGA with Slovenia (dated 2 June 2014) follows the Model 1 IGA.

Read text of the Model 1 IGA (PDF, 385 KB) as signed between Slovenia and the United States.

Treasury also reported on its FATCA webpage:

  • Seychelles reached an “agreement in substance” for a Model 1 IGA with the United States, and consented to this status as of 28 May 2014.
  • Turkey reached an “agreement in substance” for a Model 1 IGA, and consented to this status as of 3 June 2014.
  • Turkmenistan reached an “agreement in substance” for a Model 1 IGA, and consented to this status as of 3 June 2014

In early April 2014, the IRS and Treasury Department announced that foreign financial institutions (FFIs) located in a jurisdiction that has reached an “agreement in substance” with the United States, under the FATCA regime, will be treated as having an agreement in effect until the end of 2014.

 

For further information, please do not hesitate to contact us.

 

 

 

 

 

 

Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
 

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