Question & AnswerQ&A (SEC MEMORANDUM CIRCULAR NO. 8)
FATCA aims to prevent offshore tax abuses by U.S. taxpayers by requiring foreign financial institutions to report information about financial accounts held by U.S. taxpayers to the U.S. Internal Revenue Service (IRS).
Non-bank financial institutions (NBFIs) licensed by the Philippine SEC that are considered foreign financial institutions (FFIs) under FATCA are required to comply.
Depository institutions, custodial institutions, investment entities, and certain insurance companies with cash value products or annuities.
FFIs must register online with the U.S. IRS, obtain a Global Intermediary Identification Number (GIIN), and report information about accounts held by specified U.S. persons to the IRS.
A 30 percent withholding tax is imposed on payments of U.S.-sourced income to non-compliant FFIs.
The FFI must report the name, address, and Taxpayer Identification Number (TIN) of each specified U.S. person account holder, account number, account balance or value, and, to the extent provided by the IRS Secretary, gross receipts and withdrawals or payments from the account.
Evaluate if they are covered FFIs, study FATCA’s potential impact, establish policies and systems to tag FATCA-subject accounts, consider domestic laws in guidelines, raise FATCA queries through associations, include FATCA disclosures in client notices, and disclose FATCA compliance levels in reports.
Through their respective industry associations, which act as central repositories to collate and systematically submit inquiries to the U.S. Government.
Yes, the Circular instructs NBFIs to consider domestic laws such as the Securities Regulation Code, Investment Company Act, Law on Secrecy of Bank Deposits, and the Data Privacy Act in crafting FATCA compliance guidelines.
No, the SEC does not enforce or interpret FATCA laws or provide legal advice. NBFIs are advised to consult the IRS website for guidance.