Asia could have capital outflows: Aberdeen

From Asia Apr 17 2015 @ 04:04

Asian markets could see capital outflows when the US raises interest rates, according to Hugh...
view article

New Cyprus laws protect offshore homeowners from bank seizure

From Europe Apr 16 2015 @ 17:11

New Cyprus laws to protect offshore homeowners

New laws designed to protect homes from being seized by Cypriot banks are set to be passed in...
view article






Valuation gap drives China demand for HK stocks

Valuation gap drives China demand for HK stocksThe huge surge in money flowing into Hong Kong stocks, which pushed the Hang Seng...
view article

London & Colonial launch flexible SIPP...

From Products Apr 17 2015 @ 12:53

Three Europe ex-UK equity funds to keep an eye...

From Products Apr 17 2015 @ 11:00



Asia could have capital outflows: Aberdeen

Asia could have capital outflows: AberdeenAsian markets could see capital outflows when the US raises interest rates,...
view article

Schroders launches flexible catastrophe bond...

From Products Apr 16 2015 @ 17:18

New Cyprus laws protect offshore homeowners...

From Europe Apr 16 2015 @ 17:11



Australian regulator steps up financial advice probe

Australian regulator steps up financial advice probeAustralia's corporate, markets and financial services regulator said it is...
view article

Asian equities team at OMGI gets Hong Kong...

From Asia Apr 16 2015 @ 13:07

Guernsey removed from Italian tax blacklist

From Tax & Regulation Apr 16 2015 @ 12:30

MORE FROM Tax & Regulation

IRS unveils latest batch of FATCA, PFIC regulations

From Tax & Regulation Jan 2 2014 BY: Helen Burggraf , Contributing Editor , International Adviser

Add to My News Comments (2)

Add to My News Print

Add to My News

add to twitter

add to linkedin

The Internal Revenue Service has published a key document aimed at helping foreign financial institutions to report to the US on the overseas accounts of US individuals, as is being required of them by the Foreign Account Tax Compliance Act (FATCA), which comes fully into force on 1 July.

The 48-page document, known as the FFI Agreement for Participating FFI and Reporting Model 2 FFI, or Rev. Proc. 2014-13, was unveiled on 26 December. and was described as being little changed from a draft version published in October, apart from some added flexibility given to FFIs that are choosing to comply with the FATCA requirements via so-called "Model 2" intergovernmental agreements with the US.

In conjunction with the US Treasury Department, the IRS also released some key temporary regulations (T.D. 9650) and proposed regulations (REG-140974-11), which cover the way passive foreign investment companies (PFICs) are to be reported.  These new regulations are considered to have taken effect on 31 December, as this was the date that they were published in the Federal Register.

Areas covered include how the ownership of a PFIC is to be determined; what the annual filing requirements for PFIC shareholders are; and an exclusion that applies to certain filing requirements which is available to shareholders who “constructively own” – that is, own by virtue of some relationship, such as marriage – interests in certain foreign corporations.

Filing requirements

According to an analysis of the new regulations by KPMG, these new PFIC rules are considered to largely adopt portions of regulations that were first proposed in 1992, with certain revisions being made to reflect statutory changes made during the intervening years.

“However, a third release, (also published in the Federal Register on December 31, 2013), withdraws a portion of the 1992 proposed regulations relating to the definitions of the terms 'pedigreed qualified electing fund' and section 1291 fund, shareholder and indirect shareholder,” KPMG said.

It noted that a provision of FATCA added a requirement  that a “United States person” who is a shareholder of a PFIC must “file an annual report containing information as may be required by the [Treasury] Secretary”.

Further FATCA regulatory guidance is expected in coming months, tax industry experts said, with two key pieces due this month.

In other news involving the US efforts to crack down on the use of overseas financial institutions by Americans to avoid paying tax, the news website of the Swiss Broadcasting Corporation reported on Tuesday that “at least 60 Swiss banks” have now agreed to sign up for a tax declaration scheme with the US, “allowing them to come clean” about any American tax-dodging clients they might have.

Swissinfo.ch noted that the agreement came “as the end-of-the-year deadline by the United States Department of Justice” was in its final hours.

Under the terms of the Swiss-US tax deal, signed in August, the US authorities asked the 300-plus banks in Switzerland to arrange themselves into four categories, depending on whether they had any tax evaders on their books.

As reported, the dispute between the US Justice Department and Switzerland's banks dates back to 2009, when Switzerland's biggest bank, UBS, admitted to criminal wrong-doing by helping Americans to evade US taxes, and agreed to turn over more than 4,450 client names and pay a $780m fine.

The following year, the President Obama signed into law what was known as the Hiring Incentives to Restore Employment Act of 2010, which is most remembered today for FATCA, buried inside it and barely noticed by most of the world for months. FATCA was designed to crack down on the use by Americans of overseas financial institutions, such as Swiss banks, to avoid their tax obligations by forcing such institutions to report to the IRS on the assets they held on behalf of Americans. As the realisation of the law's scope began to sink in, many institutions have stopped accepting Americans as clients, and a rapidly-growing number of American expats have been renouncing their citizenships.

Add to My News Comments (2)

Add to My News Print

Add to My News

add to twitter

add to linkedin


Have your say

Have your say!

Please sign in or register here to leave a comment. Registration is free and only takes a few moments.

Nervous Investor

Opinion Former

Posted by Nervous Investor
on Jan 16 2014 @ 15:31

@Thomas Azzara

So what happens when the owner of 95.5% of Company A decides to liquidate the assets and move on in possession of 100% of your money.

What also needs to be understood os that companies around the world will NOT allow US Persons (Citizens, Green Card holders and others deemed to be US persons by the IRS from time to time) to purchase stock in those companies - can you hear the door slamming on international business opportunities?

Similarly companies and charities around the world will cease employing US Persons to fill senior roles with check signing responsibilities - can you hear even more doors slamming around the world yet?

Thomas Azzara

Opinion Former

Posted by Thomas Azzara
on Jan 14 2014 @ 18:12

The FATCA rules and regulations can be mitigated with two "Pedigreed QEFs. Foreign company A owns 95% of Foreign company B.

US person X owns 4.5% of Foreign company A directly and 4.3% of FCB indirectly. US person X takes the election to be taxed as a QEF for both FCA and FCB.

X pays a small tax .. as low as .5% on the offshore profits.

Here's the IRS form X has to file for each QEF.


Under the FATCA rules, offshore banks don't have to report account owners that are not "substantial owners" (defined as sharerholder that own more than 10% of the company stock). US person X in the example above is not a "substantial owner" of either Company A or B, so the bank does not have to provide detailed information to the IRS

Share us on Twitter

Join the community

Join us on Linked In

Inform your colleagues

Switch to our mobile site

News on the go

Back tot he top of the page

Just click here...