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Foreign Account Tax Compliance Act (FATCA) Assessing its impact and developing strategies to approach it

Foreign Account Tax Compliance Act (FATCA) Assessing its impact and developing strategies to approach it. FATCA overview. US owner. Bank account. Trust. IFA / wealth manager . Platform. Broker. Fund. Insurance product. Custodian. Foreign Financial Institutions.

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Foreign Account Tax Compliance Act (FATCA) Assessing its impact and developing strategies to approach it

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  1. Foreign Account Tax Compliance Act (FATCA) Assessing its impact and developing strategies to approach it

  2. FATCA overview US owner Bank account Trust IFA / wealth manager Platform Broker Fund Insurance product Custodian Foreign Financial Institutions Income & sales proceeds US assets

  3. FATCAoverview Specific Definitions Foreign Financial Institutions (FFIs) • Non-U.S. entity that accepts deposits, holds financial assets for the account of others as a substantial part of its business, or engages primarily in the business of investing or trading securities, commodities, partnerships or any interests in such positions • Includes not only entities that are normally recognized as financial institutions such as banks, broker dealers and custodians, but also insurance companies, pension plans, mutual funds, hedge funds and family investment vehicles Withholdable payments • Any payment of interest (including any portfolio interest and original issue discount), dividends, rents, royalties, salaries, wages, annuities, licensing fees and other fixed or determinable annual or periodical (FDAP) income • Gross proceeds from the sale or disposition of U.S. property of a type that can produce interest or dividends • Interest paid by foreign branches of U.S. banks • Certain “passthru” payments Financial accounts • A financial account is any depository or custodial account maintained by a foreign financial institution and, any equity or debt interest in a foreign financial institution (other than interests that are regularly traded on an established securities market). • Identify financial accounts (specific actions for Individual accounts and Entity accounts) • Identify US, non-US and recalcitrant accounts (for individual accounts)

  4. FFIs - Agreement with the IRS • In order to avoid withholding an FFI will be required to enter into an agreement with the U.S. Treasury by 30 June 2013 whereby it will: • Obtain information to determine which holders are U.S. accounts • Comply with verification and due diligence procedures on such accounts as required by the IRS • Report information regarding certain U.S. accounts to the IRS on an annual basis • Where foreign law would prevent such reporting obtain a waiver and if unable to obtain a waiver, close the account • Deduct and withhold the 30% tax on payments to recalcitrant account holders, • Recalcitrant account holder is any account holder that does not provide documentation as to its status as U.S. or foreign or fails to provide a waiver if located in a foreign jurisdiction that prevents reporting of any information on the account holder • Comply with requests from the IRS for any additional information

  5. What does FATCA mean for individuals? Account Requirements US Accounts Non US Accounts Undocumented Accounts (Recalcitrant) Private Family Company / Vehicle • Information will be reported • Static data - Name, Address, Tax Identification Number (TIN), account number • Transactional data - certain balances and gross receipts / withdrawals • Withholding tax at 30% will apply • Account will be closed • Certify whether US persons have a 10% interest (directly or indirectly) • Information will be reported if US person has interest >10% • No information reported • No withholding

  6. What does FATCA mean for individuals?

  7. Family GovernanceOpening the DiscussionAli KazimiDecember 2011

  8. Agenda What is family governance? What are the benefits achieved? How can you get started? Q & A

  9. What is Family Governance? Family Governance Family Governance provides the framework in which, roles, policies, processes, and controls needed to guide decisions can be established, monitored, and modified to attain organizational goals and objectives. Roles • Why is it important to high net worth families? • Creates a roadmap for families to achieve their goals and objectives by: • establishing a vision and plan • promoting accountability among family members • creating a set of controls • providing guidance by a set of experts (i.e., independent • board members, trustees and other advisors) • addressing significant and difficult family questions • providing a forum to resolve disputes and open lines of • communication • helping family members regard one another as peers Controls Policies/ Processes

  10. What are the benefits achieved? Embodies the family’s evolving philosophy towards the type of legacy it wants to leave behind. Gives stakeholders a voice in the rules that guide decision-making. Eases family dynamics (i.e. family members feel more comfortable taking decisions forward). The decisions made will maintain current and future generations, not simply maintain current life styles. Helps visualize the impact on future generations by focusing on growth of the investment instead of individual family members present goals.

  11. How can you get started? Taking the right steps…. Attain family buy-in to recognize the need for a board and its potential long term benefits Establish stakeholders roles, authorities, and obligations - Create a process of when and how stakeholders should interact with various family groups and trusts Start with a discrete investment or pool of funds - Identify an amount of money that will be bifurcated from other investments • Simply invite people to participate in a meeting to discuss the family’s goals ` and objectives for the company

  12. Questions and Answers ? ? ? Contact Information • Ali Kazimi • Managing Director • International Tax Services • Deloitte & Touche Middle East • Email: alikazimi@deloitte.comTel: +971 4 506 4910 • Mobile: +971 50 854 7729

  13. About Deloitte: Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 170,000 professionals are committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. About Deloitte & Touche (M.E.): Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010 and 2011 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards.

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