WHEN AND WHAT WILL YOU REPORT?

 

FATCA

 

As a Foreign Financial Institution, the Bank is required to disclose details of all “U.S. Reportable Accounts” held on its books.

 

Individual

 

The information that must be provided includes:

 

1. The name, address and U.S. Taxpayer Identification Number (“TIN”) of each account holder (if the TIN is not available, the date of birth will be reported);
2. The account number.
3. The year-end account balance or value (starting 31st December 2014); and Certain amounts and proceeds received in the account as required under FATCA.

 

Entities

 

For Entities holding accounts with the Bank, the disclosure is not only limited to the Entity, but will also apply to any of its U.S. Controlling Persons (in the case of a Passive Non- Financial Foreign Entity (“NFFE”).

 

The information that must be provided includes:

 

1. The name, address, and the Employer Identification Number (“EIN”) of each reportable account holder.
2. The name, address, and TIN (if any) of each substantial U.S. owner of such entity (if the TIN is not available, the date of birth will be reported).
3. The account number.
4. The year-end account balance or value (starting 31st December 2014); and Certain amounts and proceeds received in the account as required under FATCA.
5. In addition to the above, in case the entity is an Account Holder and is identified as having one or more Controlling Persons who are Reportable Persons, the reporting Financial Institution is required to disclose:

 

1. The name, address, jurisdiction(s) of residence, and Taxpayer Identification Number(s)(“TIN”) of the entity; and
2. The name, address, jurisdiction(s) of residence, Taxpayer Identification Number(s) (“TIN”) and date and place of birth of each Controlling Person who is a Reportable Person.

 

 

Financial Institutions

 

Financial Institutions (FIs) are required to participate in the FATCA program and obtain a Global

Intermediary Identification Number (“GIIN”) from the IRS as a confirmation of their participation. All FIs in a country with an Inter-Governmental Agreement (IGA) is considered to be participating in the FATCA program by default.

 

As part of the due diligence process, FIs should obtain the participating status of Financial Institutions with whom they maintain relationships. FIs are also required to validate the GIIN of the counterparty on the web portal where IRS publishes the list of FIs that have participated in the FATCA program and obtained a GIIN.

 

CRS

 

To be compliant, a reporting Financial Institution is required to disclose details of any Account Holder who is a Reportable Person, i.e., who falls under the scope of CRS.

 

Individual

 

The information that must be provided includes:

 

1. The name, address, jurisdiction(s) of residence, Taxpayer Identification Number(s) (“TIN”) and
2. the date and place of birth;
3. The account number(s);
4. The year-end account balance(s) or value (starting 31st December 2016) or, if an account was closed during the year, a “0” balance for that account; and Certain amounts and proceeds received in the account as required under CRS.

 

 

Entities

 

The information that must be provided includes:

 

1. The name, address, jurisdiction(s) of residence, and Taxpayer Identification Number(s) (“TIN”) of the entity.
2. The account number(s);
3. The year-end balance or value (starting 31st December 2016) of each account or, if an account was closed during the year, a “0” balance for that account; and
4. Certain amounts and proceeds received in the account as required under CRS.
5. In addition to the above, in case the entity is an Account Holder and is identified as having one or more Controlling Persons who are Reportable Persons, the reporting Financial Institution is required to disclose:

 

1. The name, address, jurisdiction(s) of residence, and Taxpayer Identification Number(s)(“TIN”) of the entity; and
2. The name, address, jurisdiction(s) of residence, Taxpayer Identification Number(s) (“TIN”) and date and place of birth of each Controlling Person who is a Reportable Person.

 

We will be communicating with affected customers in detail on these requirements.

 

WHAT SHOULD I DO IF I DO NOT KNOW HOW TO COMPLETE THE FORMS?

 

The FAQs are intended to provide a general and high-level overview of tax residency for customers and should not be used solely to determine your tax residency status. Your country(s) of tax residency is based on your own personal circumstances.

 

If after reading the FAQs and accompanying instructions on the forms, you are unsure of your tax residency status please contact a professional tax advisor.

 

You may find more information on how to determine tax residency by visiting the OECD website on the following link: http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/ taxresidency/

 

WHAT HAPPENS IF I DO NOT COMPLETE THE FORMS OR DO NOT PROVIDE THE REQUIRED INFORMATION?

 

The Bank may be obligated to decline any requests for new accounts, and decline any further transactions for existing clients that do not provide a completed form and applicable documentation. Generally, all new clients are expected to provide the relevant forms to open any new financial account with the Bank. If you do not respond to the Bank’s request for a form and depending on the details on your record, the Bank may need to treat your account as a reportable account.

 

WHAT IS THE DIFFERENCE BETWEEN COUNTRY OF RESIDENCE AND TAX?

 

The criteria of tax residency may be different from one country to another. For individuals, tax residence in a country can be based on a number of factors (one or more may apply) such as Nationality, number of days you spend in a country, place of work, accommodation and financial interests.

 

For example, in a large number of countries an individual’s tax residency is based on the number of days that he/she has stayed in the country. An individual is said to be resident in the country if he/she is in the country for more than 182 days in any fiscal year.

 

Typically, an individual will be resident for tax purposes in only one country (the country in which they live). Some individuals can be tax resident in more than one country.

 

WHAT IS THE DIFFERENCE BETWEEN ACTIVE AND PASSIVE Entity?

 

CRS/FATCA refer to Non-Financial Entities by their acronym, NFEs/NFFES. It is essentially any Entity that is not a Financial Institution. NFEs/NFFEs are then split into Passive or Active Entities with additional procedures required in relation to Passive Entities.

 

The general rule is that a Passive Entity is an Entity that is not an Active Entity. The definition of Active NFE/NFFE essentially excludes entities that primarily receive passive income or primarily hold assets that produce passive income (such as dividends, interest, rents etc.), and includes entities that are publicly traded (or related to a publicly traded Entity), Governmental Entities, International Organizations, Central Banks, or holding NFEs of nonfinancial groups.

 

An exception under exception to this is an Investment Entity that is not in a Participating Jurisdiction Financial Institution, which is always treated as a Passive NFE.

 

The OECD definition of ‘Active’ and ‘Passive’ entity is given below.

 

“Active NFE”

 

An entity is an Active NFE/NFFE if it meets any of the criteria listed below. In summary, these criteria refer to:

- Active NFEs by reason of income and assets.

- Publicly traded NFEs.

- Governmental Entities, International Organizations, Central Banks, or their wholly owned.

- Holding NFEs that are members of a nonfinancial group.

- Start-up NFEs.

- NFEs that are liquidating or emerging from bankruptcy.

- Treasury centers that are members of a nonfinancial group or Non-profit NFEs.

 

“Passive NFE”

Under the CRS/FATCA a “Passive NFE/NFES” means any NFE/NFES that is not an Active NFE.

 

In addition, Under CRS An Investment Entity located in a Non-Participating Jurisdiction and managed by another Financial Institution is also treated as a Passive NFE for the purposes of CRS.

AEOI Automatic Exchange of Information.

 

Account Holder The person listed or identified as the holder of a Financial Account by the Financial Institution that maintains the account. In the case of a Cash Value Insurance Contract or an Annuity Contract, the Account Holder is any person entitled to access the Cash Value or change the beneficiary of the contract. If no person can access the Cash Value or change the beneficiary, the Account Holders are any person named as the owner in the contract and any person with a vested entitlement to payment under the terms of the contract. Upon the maturity of a Cash Value Insurance Contract or an Annuity Contract, each person entitled to receive a payment under the contract is treated as an Account Holder.

 

Competent Authority In the case of the United States, the Secretary of the Treasury or his delegate. For CRS, the Competent Authority is the entity responsible for CRS in the jurisdiction

 

CAA CRS requires countries to execute a Model Competent Authority Agreement (“CAA”) providing the international legal framework for the automatic exchange of CRS information.

 

Controlling Persons, The natural persons who exercise control over an entity. In the case of a trust, such term means the settlor, the trustees, the protector (if any), the beneficiaries or class of beneficiaries, and any other natural person exercising ultimate effective control over the trust, and in the case of a legal arrangement other than a trust, such term means persons in equivalent or similar positions. The term “Controlling Persons” shall be interpreted in a manner consistent with the Recommendations of the Financial Action Task Force.

 

 

De Minimis rule FIs participating in FATCA program can choose to adopt the De Minimis rule whereby pre-existing accounts with balance below the De Minimis amount can be considered as Non US person and can be excluded from reporting if the entity chooses so. De Minimis amounts are US$ 50,000 for Individuals and US$ 250,000 for entities. For CRS the De Minimis rules are applicable for entities only.

 

Depository Account Includes any commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a Financial Institution in the ordinary course of a banking or similar business. A Depository Account also generally includes an amount held by an insurance company under an agreement to pay or credit interest thereon.

 

Depository Institution Any entity that accepts deposits in the ordinary course of a banking or similar business.

 

 

Entity A legal person or a legal arrangement such as a trust.

 

Equity Interest In the case of a partnership that is a Financial Institution, either a capital or profits interest in the partnership. In the case of a trust that is a Financial Institution, an Equity Interest is held by any person treated as a settlor or beneficiary of all or a portion of the trust, or any other natural person exercising ultimate effective control over the trust. A Specified U.S. Person shall be treated as being a beneficiary of a foreign trust if such Specified U.S. Person has the right to receive directly or indirectly (for example, through a nominee) a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust.

 

FATCA Foreign Account Tax Compliance Act refers to Chapter 4 of the Internal Revenue Code covering.

section 1471 through 1474. FATCA was enacted to assist the US Government to minimize instances of tax evasion by US person by investing abroad using offshore account.

 

FATCA Officer FATCA Officer is a person designated by FI or its subsidiaries to support the RO in implementing and managing compliance with FATCA

 

First Model CAA The first Model CAA -is a bilateral and reciprocal model. It is designed to be used in conjunction with Article 26 of the OECD Model Double Tax Agreement.

 

Financial Institution Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.

 

Form W 8 BEN A US tax form used to confirm Non US status of an individual, in the event of presence of US indicia.

 

Form W 8 BEN E A US tax form used to confirm Non US status of an entity, in the event of presence of US Indicia, except for passive NFE.

 

Form W 9 A US tax form to be submitted by a “US person” providing relevant details.

 

GIIN Global Intermediary Identification Number is a unique identification number issued to financial institutions who comply in the FATCA program.

 

HIRE Act Hiring Incentive for Restoration of Employment Act. The HIRE Act was passed into law on 18 March 2010 and it included the provisions for enacting FATCA.

 

IGA Inter-Governmental Agreement. Agreements entered by governments of various countries with the US Government to implement FATCA as a government-to-government initiative.