New Zealand ready for FATCA

New Zealand ready for FATCA

New Zealand is now ready to comply with US tax law that aims to reduce tax evasion by US persons who have financial accounts outside the United States said the New Zealand Bankers’ Association today.

The third reading of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill today, in conjunction with an intergovernmental agreement (IGA) signed last week between New Zealand and the United States, means that New Zealand financial institutions can comply with the US Foreign Account Tax Compliance Act (FATCA).

FATCA requires participating financial institutions around the world, including New Zealand banks, to provide relevant information about customers who are US persons and will be phased in from 1 July 2014.

To help implement FATCA New Zealand needed to enter into an agreement with the United States and to amend the Tax Administration Act 1994. The amendment passed today requires all financial institutions to collect information to determine whether a customer is a US person and to disclose required information to Inland Revenue. Under the agreement signed last week, Inland Revenue collates this information and passes it on to the US Internal Revenue Service.

“Our banks and New Zealand have little choice but to comply with FATCA,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“Not complying could see banks penalised by a 30% withholding tax on principal and income from investments in the United States. US capital markets provide much of the funding most banks need to lend to New Zealand households and businesses. So there would be a huge impact on our economy if we didn’t comply.

“Complying with FATCA also allows our banks to continue to provide services to US citizens and residents who have New Zealand bank accounts.

“We commend the government for its efforts in negotiating an IGA that secures a number of New Zealand-specific exemptions and does its best to protect New Zealanders’ interests,” Hope said.

Further information about FATCA and how it may affect you is available at:

http://www.nzba.org.nz/assets/Uploads/Documents/You-and-your-US-tax-obligations.pdf

ENDS

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