Tuesday, May 1, 2012
Ireland and the United States are in talks to establish a common approach to the Foreign Account Tax Compliance Act (FATCA), drawing on domestic and international tax legislation and treaties.
According to the Irish Funds Industry Association (IFIA), representatives from the Irish Revenue are in contact with the US Treasury, with discussions ongoing.
FATCA, enacted in March 2010, is intended to ensure that the US tax authorities obtain information on financial accounts, above certain limits, held by US taxpayers at foreign financial institutions (FFIs). Failure by an FFI to disclose information to the Internal Revenue Service (IRS) would result in a requirement to withhold 30% tax on US-source income. It is thought that Ireland wants any agreed approach to FATCA to be based on domestic tax reporting legislation and an automatic exchange of information under existing bilateral tax treaties.
As the IFIA has pointed out, Ireland is negotiating the possible adoption of a model global agreement, which would not alter or amend the obligation to identify or report certain information under FATCA, but would outline an alternative pathway for reporting FATCA information. The IFIA expects this agreement to be concluded by the end of the year.
Ken Owens, Chairperson of the IFIA, explained: "The fact inter-governmental arrangements are likely to be based on a model agreement means that any framework under which bilateral exchange of information agreements operate should be done on a consistent basis, rather than under individual agreements which might be operated on a disjointed basis. This is welcome news for an industry which operates on a multi-jurisdictional basis.”
Pat Lardner, Chief Executive of the IFIA added: “The news is very positive and a simplified standardized approach should lead to the potential benefits advocated in the joint statement. The industry Working Group is focussed on all areas of the business that compliance with FATCA and other international exchange of information obligations brings. One of the key goals is getting a consistent and standardized approach. We are committed to engagement with Revenue with the ultimate goal of improved compliance processes.”