FATCA e-alert issue 2014-37 | KPMG | LU

FATCA e-alert issue 2014-37

FATCA e-alert issue 2014-37

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Status of jurisdictions with agreed-in-substance, but unsigned, IGAs at close of 2014

On 1 December, the IRS released an advance version of Announcement 2014-38 containing jurisdictions that have been treated as if they have agreed “in substance” to a FATCA intergovernmental agreement (IGA), but that do not in fact sign the IGA before 31 December 2014.

Announcement 2014-38 (PDF, 162 KB) provides that the IRS will treat a jurisdiction as if it had an IGA in effect beyond 31 December 2014, provided that the jurisdiction demonstrates “firm resolve” to sign the IGA as soon as possible.

 

Status to continue after 31 December 2014

In 2012, Model 1 and Model 2 IGAs to implement the Foreign Account Tax Compliance Act (FATCA) were issued.

Announcement 2014-17 was issued to provide certainty to foreign financial institutions (FFIs) and other stakeholders with respect to the status of FFIs in jurisdictions that reached an agreement in substance on the terms of an IGA on or before 30 June 2014, provided that the IGA is signed by 31 December 2014.

As of 1 July 2014, 101 jurisdictions were treated as if they have an IGA in effect; 48 of these agreements have been signed, and 53 remain unsigned.

As the IRS explained in today’s release, given the large number of IGAs that were agreed in substance but have not yet been signed, there have been concerns expressed about the practical challenges presented by the requirement that all of these IGAs must be signed by 31 December 2014, in order for jurisdictions with an agreed-in-substance IGA to continue to be treated as if they had an IGA in effect.

Announcement 2014-38 provides that a jurisdiction that is treated as if it had an IGA in effect, but that has not yet signed an IGA, retains this status beyond 31 December 2014, provided that the jurisdiction demonstrates firm resolve to sign the IGA as soon as possible. After 31 December 2014, Treasury will review the list of jurisdictions having an agreement in substance on a monthly basis to assess whether it continues to be appropriate to treat such a jurisdiction as if it had an IGA in effect or whether a jurisdiction is to be removed from the list.

 

Agreed-in-substance IGAs after 30 June 2014

Announcement 2014-38 also provides guidance with respect to certain jurisdictions that reached an agreement in substance on the terms of an IGA after 30 June 2014.

The announcement provides that the following jurisdictions will be treated, as of 30 November 2014, as if they had a Model 1 IGA in effect:

  • Angola
  • Cambodia
  • Greece
  • The Holy See
  • Iceland
  • Kazakhstan
  • Montserrat
  • The Philippines
  • Trinidad and Tobago
  • Tunisia

Also, Macao will be treated, as of 30 November 2014, as if it had a Model 2 IGA in effect.

 

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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