Jurisdictions treated as if they have an IGA in effect

Jurisdictions treated as if they have an IGA in effect

The IRS today released an advance version of Announcement 2016-27 as guidance to jurisdictions that are treated as if they have an intergovernmental agreement (IGA) in effect and foreign financial institutions (FFIs) located in those jurisdictions.

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As of July 29, 2016, the United States has signed IGAs with 83 jurisdictions, of which 61 are in force. The United States has also reached “agreements in substance” with 30 jurisdictions.


Announcement 2016-27 [PDF 33 KB] provides that each jurisdiction that is treated as if it has an IGA in effect and that wishes to be continue to be treated as if it has an IGA in effect must provide the U.S. Treasury Department, by December 31, 2016, with a detailed explanation of why the jurisdiction has not yet brought the IGA into force and provide a step-by-step plan that the jurisdiction intends to follow in order to sign the IGA (if it has not been signed) and bring the IGA into force.

IGA list to be updated in 2017

On January 1, 2017, the U.S. Treasury Department will begin updating the IGA list to provide that certain jurisdictions that have not brought their IGA into force will no longer be treated as if they have an IGA in effect. In evaluating whether a jurisdiction will continue to be treated as if it has an IGA in effect, Treasury will consider whether: 

  • The jurisdiction has submitted the explanation and plan (with dates) described above
  • That explanation and plan, as well as the jurisdiction’s prior course of conduct in connection with IGA discussions, show that the jurisdiction continues to demonstrate firm resolve to bring its IGA into force

With respect to the timing of the exchange of prior year information upon entry into force of a Model 1 IGA, Treasury does not intend to find FFIs to be in significant non-compliance with the IGA as long as any information for prior years is exchanged before the next September 30th after the obligation under the IGA to exchange information has taken effect.

Today’s release states that jurisdictions that are initially determined to have demonstrated firm resolve to bring an IGA into force will not retain that status indefinitely. For example, failure to adhere to the expected timeline set out in the jurisdiction’s explanation could result in a determination that the jurisdiction is no longer demonstrating firm resolve to bring its IGA into force and therefore will no longer be treated as if it has an IGA in effect.

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