US FACTA Overview

What is FATCA?

The U.S. government intends to combat
tax evasion from the United States more
intensively. As such, the Foreign Account
Tax Compliance Act (FATCA) was enacted
into law on 18
March 2010. It will impose a
30% withholding tax on U.S. source income
unless the financial institution enters into an
agreement with the IRS and reports its
U.S. customers.

Who is impacted?

> Any bank invested in the U.S. market for its customers’ accounts or for its own account; and

> Any bank which is part of a group which invests in the
U.S. market for its customers’ accounts or for its own account.

Overview of FATCA

The provisions are additional and not substitutive to the current
QI regime already in place. Under FATCA, a 30% withholding tax
is applied on any payment (interest, dividend or sales proceeds)
on U.S. securities made to a Foreign Financial Institution, unless it
agrees to:
• Identify U.S. accounts;
• Comply with verification and due diligence procedures;
• Perform annual reporting;
• Deduct and withhold 30% from any passthru payment made to
a recalcitrant account holder or another institution without an
FFI agreement; and
• Comply with requests for additional information.



• Provisions apply as from 1 January 2013 on payments of
interest, dividend or sales proceeds on U.S. securities;
• In absence of an agreement with the IRS, a 30% withholding
tax will apply on payments of interest, dividend or sales
proceeds on U.S. securities;
• Additional reporting and withholding obligations compared
to the current QI regime;
• Enlarged due diligence and documentation requirements;
• Obligation to withhold 30% U.S. withholding tax on
payments made to recalcitrant account holders
(U.S. customers refusing disclosure and non U.S. customers
without proper FATCA documentation); and
• Annual Reporting of all assets held indirectly or directly by US Persons

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