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Basic requirements under the Act

FATCA will require FFIs to report directly to the IRS certain information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.

To properly comply with these new reporting requirements, an FFI will have to register with the IRS by April 25 2014, details of which can be found on the IRS website.

Under this agreement a “participating” FFI will be obliged to:

  • Undertake certain identification and due diligence procedures with respect to its accountholders;
  • Report annually to the IRS on its accountholders who are US persons or foreign entities with substantial US ownership; and
  • Withhold and pay over to the IRS 30% of any payments of US source income, as well as gross proceeds from the sale of securities that generate US source income, made to (a) non-participating FFIs, (b) individual accountholders failing to provide sufficient information to determine whether or not they are a US person, or (c) foreign entity accountholders failing to provide sufficient information about the identity of its substantial US owners.

Notice 2013-43 provides the phased timeline of key FATCA implementation dates for FFIs. It is important to note that many details of the new reporting and withholding requirements pertaining to FFIs are yet to be finalised through Treasury issued regulations.

Amended regulations were issued on 29 July 2013.

More information concerning the revised timeline can be found here.

Published Notices provide currently some available information and guidance, but this is not exhaustive.

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