EFAMA calls for further refinement of FATCA regs
From Tax & Regulation Feb 14 2012 BY: Helen Burggraf
, Contributing Editor
, International Adviser
Capitol Hill
The European Fund and Asset Management Association (EFAMA) today called on the US to “further refine” the rules it is proposing for the implementation of FATCA, although it acknowledged that the most recent set of draft regulations aimed at cracking down on offshore tax evasion addressed “many" of its original concerns.
EFAMA director general Peter de Proft said his organisation planned to “continue its dialog with the US Government to ensure that the final regulations” – due sometime this summer – “address the remaining issues of relevance to the European funds industry”.
In today’s statement, EFAMA acknowleged the announcement last week that the US had a agreed a deal with five European countries – including France, Germany, Italy, Spain, and the UK – whereby financial institutions in these countries would report the information required by FATCA to their local authorities, rather than directly to the IRS, and said it was “hopeful that this approach will be expanded” to include other countries.
As reported, the Foreign Account Tax Compliance Act is due to begin taking effect on 1 Jan 2013, although some elements must be addressed this year by certain individuals and foreign financial institutions. Businesses and organisations like EFAMA have until 30 April to make their final comments on the proposed regulations.
Conceived as a means of helping the US tax authorities to locate the undeclared overseas assets of American taxpayers, FATCA has sparked alarm among foreign banks, trust administrators, asset managers and others ever since it was signed into law in 2010 by President Obama, because of the significant new reporting obligations it imposes on such institutions.
Under FATCA, such non-US financial institutions, including EFAMA members, would be required to determine which of their accounts and investors are US persons, and to report them to the US, or pay a 30% withholding tax on payments of certain US source income. The US has said it expects to raise $7.6bn in tax revenue over a ten-year period.
In a statement today, EFAMA said: “We are gratified that the proposed regulations reflect the receptiveness of the US rulemakers to working with EFAMA to develop operating rules under FATCA that are sensitive to the concerns and the needs of the European funds industry.
“We have had extensive dialog with the US Treasury and IRS with the shared goal of making the application of these rules workable for the funds industry.
“In particular, the proposed regulations are responsive to how European funds are structured, and to the practical business realities of how funds operate.
“Most importantly, the proposed regulations build on EFAMA's proposals to treat many funds and their distributors as deemed compliant where they present a low risk of being a vehicle for US tax evasion.”
EFAMA, which is based in Brusssels, consists of 26 member associations and 56 corporate members, which jointly held €13trn ($17trn) in assets under management, of which €7.7trn was managed by approximately 54,000 funds, as of 30 Sep, 2011. A little more than 36,200 of these funds were Ucits funds.