Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


PwC welcomes the signing of FATCA agreement with the US


PwC welcomes the signing of FATCA agreement with the US

Revenue Minister Todd McClay and United States Chargé d’Affaires a.i., Marie Damour today signed an inter-governmental agreement (IGA) for the implementation of the Foreign Account Tax Compliance Act (FATCA) in New Zealand, providing certainty to New Zealand financial institutions preparing for the rules going live on 1 July 2014.

PwC Partner Mark Russell says the signing of the IGA allows New Zealand financial institutions to proceed with implementing the systems required for FATCA.

“Many financial institutions have been deferring some or all of their preparation for FATCA until the IGA is finalised,” said Mr Russell.

“The clarity provided by the IGA about which entities are exempt from reporting requirements or meet other concessions allows financial institutions to prepare in detail for dealing with FATCA.”

The US introduced the FATCA rules in 2010, and they come into effect in stages from 1 July 2014. The rules require global financial institutions to report to the US IRS about details of their US customers. The aim is to reduce tax evasion by US citizens investing outside of the US and failing to declare offshore investments and income.

Financial institutions that fail to adhere to the rules can have 30% of transactions associated with US financial instruments and other financial institutions withheld and paid over to the US IRS.

The US Treasury has been negotiating with a number of countries on IGAs, which establish a co-operative basis for implementing FATCA. In October 2012, the New Zealand and US Governments announced they were negotiating an IGA.

Implementing FATCA under an IGA reduces compliance costs for New Zealand financial institutions by simplifying the reporting process and allowing them to report to and make arrangements directly with the NZ IRD rather than the US IRS. It also generally eliminates the prospect of 30% of payments being withheld, which would be a major business risk.

Given the large number of countries seeking to enter into an IGA, it has taken some time for the NZ/US IGA to be concluded. In April 2014 the US Treasury announced that 19 countries, including New Zealand, would be treated as having entered into an IGA for the purposes of applying the rules until the end of 2014. This allowed New Zealand financial institutions to register with the IRS for FATCA on the basis of being based in an IGA country. This was a positive development, but the lack of a final IGA has continued to result in uncertainty about the some key aspects of the FATCA rules, including what specific local exemptions and definitions would apply.

The signing of the IGA today provides the required certainty and allows financial institutions to finalise detailed planning for 1 July 2014 and beyond.

The IGA is largely consistent with expectations. Important exclusions from the reporting requirements of FATCA include most superannuation and KiwiSaver schemes, the NZ Government and Mâori Authorities. A Memorandum of Understanding (MOU) to the IGA signed today also confirms that registered charities and employee stock option and share purchase plans will effectively be excluded from having FATCA obligations.

-ends-

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news