The Indian Cabinet, chaired by Prime Minister Narendra Modi, approved signing of an Inter-Governmental Agreement (IGA) between India and the U.S. for implementation of the U.S. Foreign Account Tax Compliance Act (FATCA).
1. What is FATCA?
12. What customer information is ING Vysya Bank expected to report to the U.S. IRS through the local regulator?
FATCA is an acronym for the United States (US) Foreign Account Tax Compliance Act (FATCA), which was introduced by the US Government in October 2009, but became law as part of the Hiring Incentives to Restore Employment (HIRE) Act on March 18, 2010. FATCA is aimed at ensuring that US persons with financial assets outside of the US are pay US tax.
Under FATCA, Foreign Financial Institutions (FFIs) have to report accounts of US persons to the US Inland Revenue Service (IRS) either directly or indirectly. They have the option of entering into agreements directly with IRS, or through the Inter Governmental Agreements (IGA’s) signed by their home countries.
In order to implement FATCA norms in India, the Government of India has reached an “in substance" Agreement to sign an Inter Governmental Agreement (IGA) with the U.S.A.
2. What does FATCA entail?
FATCA requires US persons including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires non-US financial institutions to report details of their US clients to the relevant tax authorities.
3. Who is a US person?
A U.S. person is:
A citizen or resident of the United States (including a green card holder).
A partnership, corporation, estate, trust incorporated or created under U.S. law (U.S. incorporated entity)
A non U.S. incorporated entity having shareholding of 10% or more or ownership (Substantial Ownership) held by
a. An Individual who was born in the U.S. or is a U.S. citizen or a U.S. resident (including green card holder) or has a U.S. address or U.S. mailing address or U.S. ‘in care of’ or ‘hold mail’ as a sole address.
b. A U.S. incorporated entity as described above.
4. What is the impact of FATCA in India?
The Government of India has concluded an 'In Substance' agreement with the Government of USA for entering into an Inter Governmental Agreement (IGA) for implementation of FATCA. In view of this all banks and other financial institutions in India will be required to identify, establish and report information on financial accounts held directly or indirectly by US persons.
5. Is FATCA applicable to both personal accounts and business accounts?
FATCA legislation will affect both personal and business customers who are treated as ‘US Person’ for US tax purposes. The FATCA legislation will also affect certain types of businesses with US owners.
6. What will be required of ING Vysya Bank Limited?
The Bank must:-
Undertake certain identification and due diligence procedures involving our new customers
Fulfill reporting requirements as may be defined by RBI/tax authorities in this regard.
Therefore we would be reviewing our existing customer base to confirm our customers’ FATCA status, and where necessary we may contact our customers for further information and documentation.
7. Will FATCA be applicable to me if am not a US person?
In general FATCA does not apply to non- US persons. However, if any one of the indicators mentioned below is found, you may be required to provide additional information/documentation to determine if you are a US Person under FATCA.
• US citizenship or US residence
• US place of birth
• US address including US PO boxes
• US telephone number
• Repeating payment instructions to pay amounts to a US address or an account maintained in the US
• Current Power of Attorney or signatory authority granted to a person with a US address
• If ‘Care of’ or ‘Hold mail’ address which is the sole address for the account holder
- If you are a US person you may have to submit some additional information and documentation. Please visit the IRS web site in this regard.
- What happens if one of the joint owners is a US person?A joint account that has one US owner is treated as a US account and the entire account is subject to reporting as US person.
- What will happen in case of a non US incorporated company? Will FATCA be applicable?Yes. FATCA covers a wide range of entities and not just US incorporated entities
- How frequently will I have to provide information for FATCA purposes?FATCA is an ongoing process. If there is a change in the account information, we may be required to contact you to obtain additional information/documentation.
- What customer information is ING Vysya Bank expected to report to the U.S. IRS through the local regulator?The Inter Governmental Agreement is yet to be finalized. While the reporting requirements will be finalized in the IGA, it is likely to include but may not be limited to the following information:Name, address and Tax Identification Number (TIN) of each account holder that is a specified U.S. personIf the account holder is a Passive Non Financial Foreign Entity (NFFE), the name, address and TIN of each substantial beneficial owner of that entity that is a U.S. personAccount numberAccount balance or value
- When do I have to provide the requested information and/or documentation for FATCA?We will contact you in this regard in the near future.
- What will happen if I do not provide the requested information?In light of the aforementioned, we urge you to cooperate. For more information on FATCA please visit IRS website http://www.irs.gov/