(NAR) VOL. 25 NO. 2 / APRIL - JUNE 2014
Adopted: 03 April 2014
Date Filed: 08 May 2014
The Commission En Banc in its meeting held on April 3, 2014, resolved to approve this Circular to guide non-bank financial institutions (NBFIs) that are covered by Foreign Account Tax Compliance Act (FATCA) regulations.
FATCA was enacted in 2010 by the United States (U.S.) Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. FATCA was enacted to prevent off-shore tax abuses by U.S. taxpayers, FATCA requires, among others, the on-line registration of foreign financial institutions (FFIs) with the U.S. Internal Revenue Service (IRS) and their reporting to the IRS of information about financial accounts by FFIs in which U.S. taxpayers hold a substantial ownership interest. Under the Act, noncompliance therewith will result to the imposition of a 30 percent withholding tax on payments of U.S. sourced income to FFIs.
The FFIs referred to in the FATCA pertain to financial institutions which are organized under the laws of a jurisdiction other than the United States of America.
The IRS has included the following FFIs in its non-exclusive list[1]:
NBFIs that are licensed by the Commission are hereby instructed to conduct the following procedures:
If covered as a result of procedure under item 1 above, the NBFI should refer to IRS notices which include instruction that “to avoid being withheld upon, a foreign financial institution may register with the IRS, obtain a Global Intermediary Identification Number (GIIN) and report certain information on U.S. accounts to the IRS.”[2] Under Sec. 1471 (c) of FATCA[3], the said information include report of the following:
The IRS has developed a one-stop FATCA registration portal. It allows online communication and delegation of authority where it provides flexibility for FIs to report on and manage information throughout their corporate structure.
Relative to the upcoming deadlines set by the US. Government for the compliance of foreign financial institutions with the FATCA, concerned financial institutions are advised to visit the IRS’s website, www.irs.gov for guidance.
The Commission does not enforce or interpret the law governing FATCA or provide legal advice on the same. Please refer to the IRS website for more information.
This Circular shall take effect immediately.
Signed this 3 day of April 2014, Mandaluyong City, Philippines.
For the Commission:
(SGD) MA. JUANITA E. CUETO
Commissioner
[2] http://www .irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-%28FATCA%29
[3] Hiring Incentives to Restore Employment Act. Title V, Subtitle A. Part I. Chapter 4, Sec. 1471 (c) http://www.gpo.gov/fdsys/pkg/PLAW-111publ147/html/PLAW-111publ147.htm