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

 

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news