Global Information Reporting (FATCA and CRS)
Tax compliance for internationally active entities
When the U.S. Foreign Account Tax Compliance Act (FATCA) was introduced in 2010, compliance seemed a long way off. The time has arrived, and while the heaviest burden has fallen on non-U.S. financial institutions (including foreign domiciled banks, brokers and investment funds), multinational companies in nonfinancial services industries are also affected by requirements under these rules since they must disclose their substantial U.S. owners and U.S. withholding agents are equally perplexed since they must collect documentation and withhold 30% of certain payments made to anyone who is not FATCA compliant. The Internal Revenue Service has increased enforcement of tax information reporting and withholding requirements by increasing penalties for unfiled information returns and by creating a Foreign Payments Practice with more agents to conduct examinations and enforce compliance with the rules. Companies must refocus their efforts to develop sustainable programs for ongoing compliance. RSM can help.
Partly in response to FATCA, over 100 jurisdictions (but not the United States) agreed to implement the Common Reporting Standard, a FATCA like regime that requires financial institutions in participating jurisdictions to automatically send information about account holders to their jurisdictions of residence. Although the U.S. has not adopted CRS, multinational financial institutions with branches, subsidiaries or affiliates in CRS jurisdictions must nevertheless take action to comply with its requirements.
Taking an integrated approach to FATCA and CRS compliance
Clients turn to RSM to help with a definitive sequence of events starting with information gathering and ending with filing information returns. We work with clients to assess their needs, manage risks and monitor response options. Our four-phase approach systematically maps the compliance journey.
Looking beyond implementation
FATCA compliance is ongoing; changing regulations and non-U.S. regimes require companies to consistently monitor changes and requirements and evolve their policies, procedures and systems. RSM provides value beyond the implementation by working with clients on:
- evaluating and implementing tax technology systems
- building the skills of your tax and finance functions
- representation before authorities in controversies involving tax reporting and withholding matters
- designing and testing internal controls
- assisting responsible officers with global certification processes
You have access to resources in the U.S. through RSM US LLP, and worldwide through RSM International, with resources on the ground wherever you operate and hold income and assets of U.S. citizens.
The Cayman Islands has extended the deadline for common reporting standards (CRS) reporting to July 31, 2017, and has extended the deadline for financial institutions (FIs) to notify the Cayman government of their intent to file CRS reports to June 30, 2017.
The IRS has published new FFI and QI agreements along with temporary regulations and a new QI system.
Revised withholding foreign partnership and trust agreements incorporate new regulations and relax certain compliance requirements.
The end of the year brings holidays, reunions with friends and family and, of course, deadlines associated with the twin global reporting regimes of Foreign Account Tax Compliance Act (FATCA) and common reporting standards (CRS).
Withholding agents may use the February 2014 revision of Form W-8BEN-E until Jan. 1, 2017, when they must use the April 2016 revision.