The Government has finally published the International Tax Compliance (United States of America) Regulations 2013 (as FATCA is named in the UK) to formalise the agreement reached between the UK and US Governments last year. We saw the draft regulations in February this year, but there has been a great deal of uncertainty on just how financial institutions should start implementing the draft provisions in the face of uncertain deadlines.
In July, the Internal Revenue Service (IRS) and the US Department of the Treasury revised the timelines for implementing reporting and withholding requirements under the Foreign Account Tax Compliance Act (FATCA). These amendments, whilst a cause for relief, further created uncertainty over the status of the implementation requirements in IGA countries.
As a result of the G8 summit held in Northern Ireland in June, regulators have been under added pressure to finalise and ‘square away’ the FATCA rule set. The G8 ‘action plans’, setting out the concrete steps they will take to combat tax evasion, implicitly require the implementation of FATCA (or FATCA-like) rules.
The finalised regulations outline the requirements for UK financial institutions to begin their due diligence and reporting requirements. The effective date for the regulations is 1 September 2013, and includes the IRS’s revised timeline which means key FATCA deadlines, including for the implementation of withholding and pass-through payments, remain unchanged.
The IRS’s FATCA registration website should be open by 19 August 2013, which will be just in time for financial institutions to begin testing processes and entering information.