FATCA Implications

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FATCA Implications

  1. 1. Date: December 23, 2013 Time: 10am to 12:30pm Venue: EIBFS Sharjah Campus Presented By: Syed W Quadri, CPA
  2. 2. INRODUCTION Syed W. Quadri, CPA - - Baruch College, New York, USA Practicing CPA since 1992 Specialize in US Tax Resolution Core concentration in FBAR/FATCA Matters Corporate training and advisory engagements from US Tax perspective Parallel profile of product development with leading Banks & FIs Global institutional and individual client base US Regulatory and Congressional representation Treaty based US/International tax consulting UAE, USA and Europe
  3. 3. ECONOMIC METABOLISM OF USA  Population, GDP, Budget Deficit…  Stock market collapses, Dot com bubble bursting, Credit crises, ObamaCare…  SoX, HOPE, HERA, FATCA, Dodd-Frank…
  4. 4. USAs $ Earned & Spent Sources  Business Income Tax  Personal Income Tax   Excise Tax Trade & Export Applications  Interest & Loan Servicing   Social Security Disbursement Health Care  Defense  Infrastructure & Development
  5. 5. What.Where.When of FATCA Reporting
  6. 6. FATCA BEYOND KYC & AML  Independent Guideline  Globally Regulated  Uniquely Structured  Account Centric  Country Specific  Mandatory Compliance  Consequences
  7. 7. CRUX OF FATCA REGIME  Global Accessibility (Internet / Electronic World)  Americans Abroad (7m citizens + GC Holders + Other)  Over Trillion US Corporate $ Stuck Overseas  Holocaust Survivors (subjected to income & bank a/c report)  Non-Compliance (TIEA= Tax Information Exchange Agreement)
  8. 8. It All Boils Down to… US Income Tax Act 1913
  9. 9. FATCA EFFECTING US TAXES Personal / Individual Business Fiduciary (Estate & Trust)
  10. 10. FATCA ANALYSIS  Cost - Over $25B (implementation)  Time - Over 5-7 years  Efforts - Global  Players - Over 150 Countries, 700,000 Banks & FFIs & 21M US Persons  Outcome - immediate/long term, tangible/intangible
  11. 11. Measures In Effect  Schedule B Disclosure (majority do not answer)  Foreign Bank Account Reporting (FBAR BSA 1970 / USC Title 31/FinCEN is responsible & Amnesty resulted in under 50,000 filings in total)  Global Income Reporting (Yearly Exclusion)  FATCA Filing (Form 8938)  Tax Treaties
  12. 12. Pre FATCA Warm Up  Penalized UBS $760M  Closed Vegelin & Company  Prosecuted HSBC India $1.9B  Several more to become public
  13. 13. FATCA Life Cycle - Elements  Governments – IGA (Model 1 or 2)  Bank/FFI – Agreements (Model 2)  Government & FFI – Implementation (Model 1 & 2)  Government & FFI – Compliance (Model 1 & 2)
  14. 14. What is FATCA Foreign Account Tax Compliance Act 2010 (F.A.T.C.A.) FATCA will require Foreign Financial Institutions to report the IRS either directly OR through their respective Governmental agency, information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Under FATCA, U.S. Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938 and attached to their federal income tax return.
  15. 15. FATCA FINAL REGULATION (Internal Revenue Service 26 CFR Parts 1 and 301 [TD 9610]) Relating to Information Reporting by UAE Banks and Financial Institutions and Withholding/Remitting on Certain Payments to U.S. Persons, Foreign Financial Institutions & Entities
  16. 16. Date: December 23, 2013 Time: 10am to 12:30pm Venue: EIBFS Sharjah Campus Presented By: Syed W Quadri, CPA
  17. 17. Date: December 23, 2013 Time: 10am to 12:30pm Venue: EIBFS Sharjah Campus Presented By: Syed W Quadri, CPA
  18. 18. FATCA UPDATE FOR UAE Implementation & Compliance  Government  Banks, Financial Institutions & Insurance Companies  Preexisting Accounts (individual & entity)  New Accounts (individual & entity)  Time Line
  19. 19. FATCA Requires from UAE Financial Arena  Register (Form 8957 – FATCA ID & GIIN)  Identify (Form W8 & W9)  Segregate (not reportable, reviewable & reportable)  Communicate / Consent  Review  Report (Form 8966 – Preexisting & New Accounts)  Withhold (30% Backup Withholding)  Tax Filing (Form 1042)  Internal Certifications (Responsible Person)  Compliance Audit/Examination (IRS, External/CPA)
  20. 20. Scope of FATCA for UAE
  21. 21. FATCA PLAYERS WITHIN UAE (Possible Administrative Structure)
  22. 22. FATCA FACILITATORS IN UAE  Internal Revenue Service (IRS-Referee)  Withholding Agents (WA)  Qualified Intermediaries (QI)  Withholding Foreign Partnerships (WfP)  Withholding Foreign Trusts (WfT)
  23. 23. FATCA Reporting by UAE Banks  Backup Withholding (in coordination with section 3406 for recalcitrant US persons)  Traditional 1099 Int/Misc & 1096 (in coordination with chapter 61)
  24. 24. FATCA Application - UAE BANKS & FIs  Treatment of Reporting Partner Financial Institution  Suspension of Rules Relating to Recalcitrant Accounts  Specific Treatment of Retirement Plans  Identification & Treatment of Deemed-Compliant FIs and Exempt Beneficial Owners  Special Rules Regarding Related Entities That Are Non-Participating Financial Institution
  25. 25. FATCA BENEFICIARIES  US Government/Economy (Extremely)  UAE Government (Fairly)  UAE Banks, Financial Institutions & Insurance Companies (Somewhat)  U.S. Persons & Specified U.S. Persons in the UAE (Not At All)
  26. 26. SUMMARY OF WHAT IS NEW WITH FATCA? (UAE FINANCIAL INDUSTRY CENTRIC)  Obtain & Exchange Information - Reportable Accounts 1- Preexisting (individual & entity) 2- New (individual & entity)  Time & Manner of Exchanging Information  Collaboration On Compliance & Enforcement
  27. 27. FATCA ID Each registering Bank, Financial Institution and Insurance Company in the UAE will be provided a FATCA ID that will be used for purposes of establishing and accessing the it’s online FATCA account. For all applicant entities other than Member FIs, the FATCA ID is a randomly generated six-character alphanumeric string. For Member FIs, the FATCA ID will be comprised of 12 characters: the first 6 characters will be the Lead FATCA ID, followed by a period, and the last 5 characters will be alphanumeric and assigned sequentially to each Member.
  28. 28. GLOBAL INTERMEDIARY IDENTIFICATION NUMBER (GIIN) In response to submitting Form 8957 registering Banks, Financial Institutions and Insurance Companies in the UAE will receive a notice of registration acceptance and will be issued a global intermediary identification number (GIIN). The IRS will electronically post the first IRS FFI List by June 2, 2014 and will update the list on a monthly basis thereafter. To ensure inclusion in the June 2014 IRS List, an entity will need to finalize its registration by April 25, 2014.
  29. 29. FATCA TERMINOLOGIES & UPDATED UAE CENTRIC ARTICLE Please take your copy of both
  30. 30. FATCA RELATED ADVISORY, CONSULTING & OTHER SERVICES  Governments  Banks & Financial Institutions - Model 1  Banks & Financial Institutions - Model 2  US Taxpayers/Persons/Entities - Unsolved Tax Matters  Compliance/Financial Audit & Certification  Workshops and Seminars (Online & In-Person)  TeleConferences and Webinars
  31. 31. TAKEAWAY Relative Understanding of FATCA; REGULATION IMPLEMENTATION COMPLIANCE
  32. 32. How to reach me… Via Email: squadri@mazcpa.ae squadri@swqpc.com Telephone: +971 50 1696223 & +971 4 3888303 UAE +1 516 236 9109 & +1 800 469 0198 USA  UAE:  USA: 2401 Al-Attar Tower, Dubai UAE 380 North Broadway, Suite 408 Jericho, NY 11753 USA
  33. 33. Q&A FATCA Life Cycle 2013
  34. 34. UPCOMING FATCA FOCUS EVENTS          InterGovernmental Agreements - IGAs (Model 1 & 2) FFI Agreements (Model 2) Implementation Road Blocks & Bottle Necks In-depth Compliance Structure UAE Banks, Financial Institutions & Insurance WITH Global existence. Withholding US Tax Reporting & Filing U.S. Person’s Perspective Non-Compliance Consequences
  35. 35. End of FATCA life cycle 2013 Thank you !!! With U less FATCA Stressed 2014

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