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Transcript of FATCA: impact on data management - SIX · FATCA: impact on data management ... for the purpose of...
Agenda
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• Introduction
• IRS Final Regulation and Amendments Highlights
• SIX Financial Information Data Offering
− Issuer Level Classification & Status
− Instrument Level Tax Status
− Pass-through Payment Information
• Implementation Timeline
INTRODUCTION
Foreign Account Tax Compliance Act (FATCA)
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FATCA enacted in the “Hiring Incentives to Restore Employment” (HIRE) Act, is a significant extension of the current QI (Qualified Intermediary) regime in the US, which will remain in place. FATCA is affecting all Foreign Financial Institutions (FFIs) worldwide.
Customer and counterparty (individuals and legal entities) classification and identification of US accounts (including obtaining the relevant documents and waivers)
Implementing the corresponding withholding mechanism for uncooperative individuals and non-participating FFIs SIX Financial Information will provide high-quality data on issuer classifications & instrument level tax status
Implementing the required IRS reporting
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1 Three main areas of impact for participating FFIs
FATCA
IRS Final Regulation and Amendments Highlights
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• Embedding the Inter Governmental Agreements (IGA) Model I & II into the regulation
• Expansion of the FFI categories • Clarification of documentation issues (such as
W-8BEN) and compliance and verification obligations of FFIs
• Introduction of the FFI registration process and the new Global Intermediary Identification Number (GIIN)
• Withholding of FDAP payments by FFI and US withholding agents for new account holders and non- participating FFI in the absence of proper documentation
Key Dates 19 Aug 2013
IRS Portal accessible for FFIs
20 Feb 2014
New IRS Procedures and Amendments to regulations (details on next slide)
5 May 2014
Recommended FFI registration (ensures inclusion in the 1st list published)
2 Jun 2014
IRS publication of FFI list with GIIN (thereafter updated on a monthly basis)
30 Jun 2014
cut-off for Grandfathered obligations (not subject to FATCA withholding)
1 Jul 2014
Distinguishing between old and new account date, 30% withholding to start
1 Jan 2017
Withholding on Gross Proceeds and Pass-through Payments starts
20 FEB 2014
New IRS Procedures and Amendments to regulations
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Clear message from Treasury: FATCA “will go into effect on July 1, 2014” – there will be no delay for the FATCA start date. Amendments to FATCA regulations to take into
account stakeholder comments The document contains amendments to the Final Regulations with regards to reporting mechanism: • the treatment of special purpose debt
securitization vehicles • the treatment of entities as branches of foreign
disregarded financial institutions • the definition of expanded affiliated group and
transitional rules for collateral arrangements prior to 2017
Coordination of FATCA with pre-existing reporting and withholding rules The document coordinates FATCA with other existing regulations like Chapter 61 and section 3406 (dealing with reporting and withholding requirements): • rules for identification of payees • coordination of the withholding requirements under
Chapter 3, Section 3406, and FATCA • coordination of Chapter 61 and FATCA regarding
information reporting with respect to U.S. persons • conforming changes to the regulations
implementing the various regimes
2 APR 2014
New IRS Procedures and Amendments to regulations
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• The new date for registering ensuring appearance on the first FFI list which will published on 2.6.2014 is 5.5.2014 (previously: 25.4.2014)
• Jurisdictions will included on the IRS list also in cases where the agreements were consent achieved but not signed yet
2014 amendments are not influencing SIX Financial
Information’s current FATCA data management
Key Dates 19 Aug 2013
IRS Portal accessible for FFIs
20 Feb 2014
New IRS Procedures and Amendments to regulations (details on next slide)
5 May 2014
Recommended FFI registration (ensures inclusion in the 1st list published)
2 Jun 2014
IRS publication of FFI list with GIIN (thereafter updated on a monthly basis)
30 Jun 2014
cut-off for Grandfathered obligations (not subject to FATCA withholding)
1 Jul 2014
Distinguishing between old and new account date
1 Jan 2017
Withholding on Gross Proceeds and Pass-through Payments starts
Existing Data Additional Data
QI Regime Data
Pass-through Payment Information
Instrument Level Tax Status
Issuer Level Classification & Status
SIX Financial Information Data Offering
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The IRS will maintain a register for all FFIs which have signed the agreement (Participating FFI as well as potentially exempt and deemed compliant FFIs). Entities will be marked as “compliant” upon information provided by the IRS (The IRS committed to maintain and publish the list).
FATCA Entity Type GIIN-Number
98Q96B.00000.LE.250
Issuer Level Classification & Status
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FFI Status
Non-Financial US Entity
US Financial Entity
US Entity Foreign Entity
Foreign Financial Entity FFI
Non-Financial Foreign Entity NFFE
Exempt FFI
Deemed Compliant FFI Registered deemed compliant FFI
Certified deemed compliant FFI
Participating FFI
Non-Participating FFI
Sample Extract from the IRS FFI Register
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The IRS has published a first draft of the information they will make available for registered FFIs.
GIIN,FINm,CountryNm 98Q96B.00000.LE.250,Test Bank One,France 98Q96B.00000.BR.826,Branch,United Kingdom 98Q96B.00000.BR.036,Branch,Australia 98Q96B.00000.BR.076,Branch,Brazil 98Q96B.00000.BR.818,Branch,Egypt 98Q96B.00001.ME.276,Test Bank Two,Germany 98Q96B.00001.BR.826,Branch,United Kingdom 8124H8.00000.SP.208,Test Bank Three,Denmark C54S47.99999.SL.276,Test Bank Four,Germany C54S47.99999.BR.208,Branch,Denmark 126BM7.00000.LE.826,Test Bank Five,United Kingdom 126BM7.00000.BR.250,Branch,France 126BM7.00001.ME.208,Test Bank Nine,Denmark 126BM7.00002.ME.276,Test Bank Ten,Germany 126BM7.00002.BR.344,Branch,Hong Kong SE19K4.99999.SL.250,Test Bank Eleven,France 76GHU9.00000.BR.036,Branch,Australia 76GHU9.00000.BR.818,Branch,Egypt 92YNJG.00000.BR.076,Branch,Brazil
FATCA ID (first 6 characters)
Financial Institution Type Lead = 00000 Sponsoring Entity = 00000 Single = 99999 Member = Last 5 characters of FATCA ID
Category Code LE = Lead SL = Single ME = Member BR = Branch SP = Sponsoring Entity
Country Identifier
Instrument Level Tax Status
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30% withholding tax deducted for recalcitrant account holders and non-participating FFIs
Obligations with a fixed maturity date outstanding on 1 July 2014 exempt from 30% withholding tax
Subject to the pass-through payment percentage rules for the purpose of the 30% withholding tax
Not subject to the 30% withholding tax
FATCA Instrument Tax Status
In Scope US Security
Exempt Grandfathered US Security
Partly In Scope Security Issued by FFI
Out of Scope Security Issued by NFFE
In Scope Materially Modified Security
Exempt Short-Term Obligation
Obligations which are payable 183 days or less from the date of original issue
Previously Grandfathered Security which has undergone a Material Modification and is now subject to withholding
“LIVE” DATA available now
Material Modification
Monitoring Instruments for “Material Modifications”
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Item Event Type 400 Merger / Takeover
400 Demerger / Reorganisation
400 Legal proceedings
400 Liquidation
380 Extension of maturity by creditor
381 Unforeseen extension of maturity by debtor
388 Shortening of maturity by debtor
379 Change of interest rate
382 Reduction or non-payment of capital
278 Interest payment (status default)
281 Settlement of interest / capital arrears
598 Other Events
Grandfathered obligations will be monitored for a series of event types that could potentially be treated as a material modification and hence cause the loss of the grandfathered status.
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Grandfathered Securities Corporate Events
Create Monitoring List
Issuer / Agent
Request Qualification
Monitoring List Process Monitoring List
Update Instrument Tax Status
MATERIAL MODIFICATIONS
Ongoing oversight & reporting of martial modifications
All participating FFIs will be required to publish their Pass-through Payment Percentage on a quarterly basis. The calculation is based on the value of US assets vs. total assets and take into account the last four quarters (Asset Test) - effective 1 January 2017.
Pass-through Payment Percentage
SHS ABC Banking Participating FFI
GIIN-Number 98Q96B.00000.LE.250
01/01/2017 – 31/03/2017 28.5 PCT
01/04/2017 – 30/06/2017 31.8 PCT
01/07/2017 – 30/09/2017 29.2 PCT
01/10/2017 – 31/12/2017 29.8 PCT
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Pass-through Payment Information
Implementation Timeline
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2012 2013 2014 2015
2011
Starting of FFI registration with IRS
Summer 2012: Final regulations from IRS anticipated
1 January 2014 /2015: Start of withholding and reporting of US clients personal information and acc. balance 7 /8 July
2012 10/11 Nov 2012
16/17 Nov 2013*
15/16 Nov 2014*
6/7 July 2013*
5/6 July 2014*
8 February 2012: Published Proposed regulations from IRS
Reg
ulat
ors‘
Tim
elin
e
2012 2013 2014 2011
19/08/2013 Starting of FFI registration with IRS
01/01/2017: Reporting of pass-through payments, Full info. on US accounts inc. gross proceeds
17/01/2013: IRS published the Final Regulations
01/07/2014 : FATCA withholding begins for new NPFFI, recalcitrant account holders
7 /8 July 2012
10/11 Nov 2012
9/10 Nov 2013
15/16 Nov 2014*
14/15 Nov 2015*
VDF Releases
6/7 July 2013
5/6 July 2014*
4/5 July 2015*
Develop- ment Data Offering
08/02/2012: Published Proposed regulations from IRS
Tim
elin
e of
SIX
Issuer Classification (based on IRS-FFI List) Implementation Pass-
Through Payment Information
2016
5/05/2014 – Recommended FFI final registration with IRS
2017
02/06/2014 – IRS posts the first IRS FFI List
VDF Release 2/12: FATCA Structures
01/07/2014 – Grandfathered Obligations cut-off
FATCA Instrument Level Status available as of 25/01/2014
Today