The Foreign Accounts Tax Compliance Act (FATCA) is U.S legislation that was enacted by U.S. Congress in March 2010 and came into force in July 2014. Under the new FATCA regulations, foreign financial institutions (FFIs) must identify U.S. account holders as well as entities under U.S. control (i.e. U.S. persons having a substantial ownership interest in the entity) and provide the IRS with information on their assets, income payments and trade flows during the fiscal year. FATCA regulations generally became effective on July 1, 2014.
How does FATCA impact PROCHOICE and its clients?
To be FATCA compliant, PROCHOICE must register its own FFIs with the IRS. In addition, FATCA regulations require PROCHOICE to review existing onboarding and withholding processes and enhance them to comply with the regulations.
As part of an enhanced client onboarding process, additional documentation may be requested for clients holding accounts at PROCHOICE. For instance, PROCHOICE may need to obtain tax forms (i.e. W9/W8 series documents) after July 1, 2014, from both new and existing accountholders in order to identify the client’s tax classification.
In what cases do I need to submit a Form W-9/W8-BEN/W8-BEN-E to PROCHOICE?
In order to determine if tax withholding is applicable, PROCHOICE must authenticate the residency of its accountholders. For instance, if an account is held by a non-U.S. citizen or non-U.S. registered business entity, PROCHOICE may require a Certification of Foreign Status, such as Form W8-BEN or W8-BEN-E for the account. Similarly, if an account is held by a U.S. citizen, U.S. resident alien or U.S. business entity, the accountholder may be required to certify his/her tax status by completing a Form W-9. Please note that PROCHOICE does not accept US clients.
How will I know what Form to complete?
- S citizens or corporations may complete a W-9 Form by downloading if from the following webpage: http://www.irs.gov/pub/irs-pdf/fw9.pdf
- Instructions for non – US citizens or corporations can be found in detail in the following webpage: http://www.irs.gov/pub/irs-pdf/iw8.pdf, and are generally outlined below for your convenience:
- W-8BEN-non-US individual (unless individual falls under below classification)
- W-8BEN-E-non-US entity (unless entity falls under below classification)
- W-8ECI-non-US person with claim that income is effectively connected with the conduct of a trade or business in the United States
- W-8IMY-non-US intermediary, non-US flow-through entity, or non-us trust.
- W-8EXP-non-US government, international organizations, non-US central banks of issue, non-US tax-exempt organizations, non-US private foundations, or governments of US possessions
IMPORTANT NOTE
In case there are further queries regarding FATCA or local legislation, or FATCA classification, clients are advised to contact a professional tax advisor, as PROCHOICE is unable to provide tax advice
Where I can find more information about FATCA?
The IRS website (http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA) offers additional information regarding FATCA compliance. You may also reference the US Department of the Treasury website (http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx) for supplementary information on IGAs.
