On Implementing Requirements of the Foreign Account Tax Compliance Act (FATCA)
On March 18, 2010 the US Senate passed Foreign Account Tax Compliance Act (hereinafter – “FATCA”), the main purpose of which is to prevent tax dodging by US citizens.
The provisions of FATCA, in addition to the foreign banks’ obligation to enter into a special agreement with the US Internal Revenue Service (IRS) on exercising control over availability of US taxpayers’ accounts therein and disclosing information on such accounts, allow for the application of economic sanctions to financial institutions that are not FATCA compliant. In case of the American counterparty bank’s or correspondent bank’s decision that FATCA requirements should be applied to the beneficiary of payment, 30% of the amount of the clients’ international banking transfers may be withheld.
The FATCA Registration Portal shall be the main means of the financial institutions’ interaction with the IRS. The Portal shall make it possible to fill and update the registration forms, agreements, and information on the authorities of the financial institutions’ officials responsible for meeting FATCA requirements. The Portal shall be opened for registration and entering into agreements on July 15, 2013 at the latest. Financial institutions will have to register on the Portal and acquire a global intermediary identification number, which will be assigned by October 15, 2013 at the latest.
The list of financial institutions registered to be FATCA compliant will be published by the IRS on December 2, 2013 (it will be updated on a monthly basis). The last date by which a financial institution can register to ensure its inclusion on the December 2013 FFI List is October 25, 2013.
Therefore, an agreement with the IRS shall be signed by the end of December 2013. The US residents and clients that are objectors shall incur responsibility for new revealed accounts since January 1, 2014. The FATCA compliant institutions shall start to send reduced reports for 2013 to the IRS since March 31, 2015. A tax amounting to 30% of revenues from the sale of FATCA incompliant financial institutions’ and clients-objectors’ assets shall be withheld since December 31, 2016.
News and Events
November 19, 2013
The Ministry of Foreign Affairs (MFA) of the Republic of Belarus informed the Ministry of Taxes and Duties on the readiness of the American party to conclude an intergovernmental agreement on the enforcement of the USA law “Foreign Account Tax Compliance Act” (FATCA). The work to determine the agreement sample which is appropriate for the Republic of Belarus out of a number of the variants given by the USA is currently in progress. The variant of the agreement sample chosen will be introduced into the Government for consideration.
August 20, 2013
The National Bank approved the draft Decree of the President of the Republic of Belarus “On Some Issues of Providing Information on Income and Assets of Foreign Organizations and Natural Persons of Foreign Countries” without comments.
August 19, 2013
A meeting of the working group with a view of developing a unified position among the parties concerned on specific provisions of the draft Decree of the President of the Republic of Belarus “On Some Issues of Providing Information about the Income and Assets of Foreign Organizations and Natural Persons of Foreign Countries” was held.
August 19, 2013
U.S. Internal Revenue Service announced the opening of a new online registration system for financial institutions that need to register with the IRS in accordance with FATCA. The registration portal is placed at: https://sa2.www4.irs.gov/fatca-rup.
August 6, 2013
A seminar on issues of practical approach to FATCA on the basis of the Ministry for Taxes and Duties in conjunction with JSC “KPMG Advisory” was held. The representatives of the working group, Association of Belarusian Banks, banks, brokers, depository institutions, and insurance companies took part in this seminar.
June 13, 2013
By order of the Prime Minister of the Republic of Belarus a working group on developing measures aimed at avoiding the application of sanctions with respect to payments being made in favour of the Belarusian organizations and banks covered by the Foreign Account Tax Compliant Act (FATCA) was established. The group included representatives of the Ministry of Taxes and Duties, Ministry of Finance, the National Bank, the Ministry of Foreign Affairs, the Ministry of Industry, JSC “JSSB Belarusbank”, and “Priorbank” JSC.
May 05, 2013
Deputy Prime Minister of the Republic of Belarus approved the plan of actions aimed at avoiding the application of sanctions stipulated by Foreign Account Tax Compliance Act (FATCA) to the payments being made in favour of the Belarusian organizations and banks.
May 3, 2013
The proposals on the Draft Edict of the President of the Republic of Belarus “On Certain Issues of Taxation of Organizations and Natural persons” were developed as a result of meeting and submitted to the Ministry on Taxes and Levies.
April 25, 2013
Representatives of the involved government agencies had a meeting designed to develop the measures aimed at implementing Foreign Account Tax Compliance Act (FATCA).
April 9, 2013
“Priorbank” JSC was designated a pilot bank in implementing FATCA.
April 5, 2013
Association of Belarusian Banks in concert with the National Bank carried out a meeting with banks on the issues of implementing Foreign Account Tax Compliance Act (FATCA).
March 26, 2013
A meeting of the Section on Developing Banking and Payment Systems of the Republic of Belarus of the Advisory Council within the National Bank with participation of the representatives of government agencies, banks, business community, and scientific and public institutions took place. Based on the results of the meeting, the expediency of adopting FATCA by the Republic of Belarus was noted, as well as comprehensive recommendations on implementing FATCA in the Republic of Belarus were developed and sent to the involved government agencies.