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:
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.
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