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Bracing for FATCA

The U.S Department of the Treasury has published the Model Intergovernmental Agreement for Cooperation to Facilitate the Implementation of FATCA (Model 2).

The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to report information to the Internal Revenue Service (IRS) about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership.

Last year, the IRS announced a one-year extension to the proposed regulations after concerns were raised relating to timelines in an earlier announcement. Participating Foreign Financial Institutions (FFIs) and registered deemed compliant FFIs are now required to implement new account opening procedures by January 1, 2014.

At the time of going to print, the U.S. Department of the Treasury had signed a bilateral agreement with the U.K. to implement the tax-reporting requirements. It was also engaged with an additional 50 countries and jurisdictions, having intergovernmental talks with Canada, Mexico, Japan, Germany, France, Italy, Spain, Switzerland, the Netherlands, Finland, Norway, Denmark, Sweden, Israel, Singapore, Australia, Russia and South Africa. ◊