Foreign Account Tax Compliance Act
Foreign Account Tax Compliance Act (FATCA)
FATCA is a component of the Hiring Incentives to Restore Employment Act (the HIRE Act), which was enacted by the US Congress and signed into law on 18 March 2010. FATCA’s objective is to reduce tax evasion by US individuals receiving income from financial assets held outside the United States. FATCA has worldwide impact. Its provisions are designed with incentives for foreign financial institutions (FFIs) to provide information to the US Internal Revenue Service (IRS) on financial accounts held by US persons. While foreign institutions are outside of US jurisdiction and have no formal reporting obligation to the US, they will be incentivised to comply in order to avoid a 30% withholding tax on payments received from sources within the US levied on non-compliant individuals or entities.
FATCA compliance requires that an FFI, including foreign subsidiaries of US-based organizations, take steps to:
- Enter into an FFI Agreement with the IRS that states its intent to comply with FATCA or if resident in a country that has entered into an Intergovernmental Agreement (IGA) with the US, register with the IRS and obtain a Global Intermediary Identification Number (GIIN).
- Conduct Due Diligence procedures on new and pre-existing accounts to establish the FATCA status of the Account Holder and determine whether the account is a US Reportable Account.
- Withhold 30% tax on certain payments to individuals and entities that fail to comply.
- Report account information to the IRS or if under a Model I IGA, to the local tax authorities.
The US Treasury published two Model Intergovernmental Agreements (Model 1 and Model 2 IGAs) for implementing the broad-ranging provisions of FATCA globally. Non-US countries will enter into one of these agreements with the US and following this, introduce local regulations to implement the agreement. Under a Model 1 IGA, a foreign financial institution (FFI) in a respective partner country is required to report US-owned account information directly to their local tax authority, rather than to the Internal Revenue Service (IRS). The local authority would then automatically share that information with the IRS. However Model 2 IGA requires FFIs to report certain information directly to the IRS.
Singapore entered into a Model 1 IGA with the US on 9 December 2014. Pursuant to this Model 1 IGA, Singapore enacted the Income Tax (International Tax Compliance Agreements) (United States of America) Regulations 2015 ("FATCA Regulations"), which came into effect on 18 March 2015.
The FATCA Regulations require Tokio Marine Life Insurance Singapore Ltd. (TMLS) to collect certain information about each Account Holder’s tax residency and its FATCA classification. Please note that TMLS cannot provide you with any advice including tax advice and if you are unsure about how to complete your FATCA declaration, please consult your tax advisor. It is the responsibility of the Account Holder to ensure that the information provided is complete and accurate and, additionally, to provide TMLS with any additional documentation, information or replacement forms when requested or required.
TMLS assumes no responsibility for the independent verification of any information provided on your FATCA declaration and will rely on such information as being complete and accurate in all material respects. TMLS is also under no obligation to accept your FATCA declaration if we have either reason to know, believe or have actual knowledge that the information provided in your FATCA declaration is invalid or incorrect. TMLS, when requesting your FATCA declaration, will operate under the regulations applicable to its local tax jurisdiction or country where the Account Holder is located, if applicable.
Definition of "U.S. Person" and "U.S. Indicia"
The term "U.S. person" means:
- A U.S. citizen or resident individual;
- A partnership or corporation organized in the United States or under the laws of the United States or any State thereof;
- A trust if a court within the United States would have authority under applicable law to render orders or judgments concerning substantially all issues regarding administration of the trust, and one or more U.S. persons have the authority to control all substantial decisions of the trust; or
- An estate of a decedent that is a citizen or resident of the United States.
The term "U.S. Indicia" means:
- Identification of the Account Holder as a U.S. citizen or resident;
- Unambiguous indication of a U.S. place of birth;
- Current U.S. mailing or residence address (including a U.S. post office box);
- Current U.S. telephone number;
- Standing instructions to transfer funds to an account maintained in the United States;
- Currently effective power of attorney or signatory authority granted to a person with a U.S. address; or
- An “in-care-of” or “hold mail” address that is the sole address the Reporting Singaporean Financial Institution has on file for the Account Holder.
Note: Form W-9 / Form W-8BEN / Form W-8BENE can be obtained from: http://www.irs.gov.