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

 

Post-Post: Brian Roche To Step Down As NZ Post CEO

Brian Roche will step down as chief executive of New Zealand Post in April 2017, having led the state-owned postal service's drive to adjust to shrinking mail volumes with a combination of cost cuts, asset sales, modernisation and expansion of new businesses. More>>

ALSO:

Company Results: Air NZ Rides The Tourism Boom With Record Full-Year Earnings

Air New Zealand has ridden the tourism boom and staved off increased competition to deliver the best full-year earnings in its 76-year history. More>>

ALSO:

New PGP: Sheep Milk Industry Gets $12.6M Crown Funding

The Sheep - Horizon Three programme aims to develop "a market driven, end-to-end value chain generating annual revenues of between $200 million and $700 million by 2030," according to a joint statement. More>>

ALSO:

Half Full: Fonterra Raises Forecast Milk Price

Fonterra Co-operative Group Limited today increased its 2016/17 forecast Farmgate Milk Price by 50 cents to $4.75 per kgMS. When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.25 to $5.35 before retentions. More>>

ALSO:

Keep Digging: Seabed Ironsands Miner TransTasman Tries Again

The first company to attempt to gain a resource consent to mine ironsands from the ocean floor in New Zealand's Exclusive Economic Zone has lodged a new application containing fresh scientific and other evidence it hopes will persuade regulators after their initial application was turned down in 2014. More>>

Wool Pulled: Duvets Sold As ‘Premium Alpaca’ Mostly Sheep’s Wool

Rotorua business Budge Collection Limited (Budge) and sole director, Sun Dong Kim, were convicted and fined a total of $71,250 in Auckland District Court after each pleading guilty to four charges of misrepresenting how much alpaca fibre was in their duvets. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news