On November 29, the United States signed intergovernmental agreements with the Cayman Islands and Costa Rica to implement the Foreign Account Tax Compliance Act (FATCA). The Cayman Islands will be required to report tax information about U.S. account holders directly to the Cayman Islands Tax Information Authority, which will in turn relay that information to the IRS. Press Release. Costa Rica IGA. Cayman Islands IGA.
FATCA
Extension of FATCA Withholding Start Date and Grandfathering End Date
On July 12, Treasury and the IRS announced that they intend to amend final Treasury regulations implementing the U.S. Foreign Account Tax Compliance Act (FATCA) to provide for a six-month extension to the start of FATCA withholding and the end of the FATCA grandfathering period, from January 1, 2014 (under current regulations) to July 1, 2014, in order to allow for a more orderly implementation of FATCA. In addition, the timelines for implementing certain FATCA account due diligence requirements and FATCA registration requirements are to be extended, and Treasury and the IRS will provide a list of jurisdictions that will be treated as having in effect an intergovernmental agreement (IGA) with the U.S. FATCA withholding is scheduled to apply to payments of U.S. source dividends, interest and other fixed payments beginning July 1, 2014, and to payments from the disposition of property producing such payments beginning January 1, 2017. IRS Notice 2013-43.
Final Regulations Implementing the Foreign Account Tax Compliance Act
On January 17, 2013, the Internal Revenue Service (IRS) released final regulations (the Final Regulations) implementing the reporting and withholding provisions of the HIRE Act (commonly known as the Foreign Account Tax Compliance Act, or FATCA, provisions) that target noncompliance by U.S. taxpayers using foreign accounts. The Final Regulations build on proposed regulations published on February 15, 2012, to provide additional certainty for financial institutions and government counterparts by finalizing the step-by-step process for U.S. account identification, information reporting and withholding requirements for foreign financial institutions (FFIs), non-financial foreign entities (NFFEs) and U.S. withholding agents. For more information, please click here.
Rating Agency Developments
On August 30, Fitch issued a release on the potential wide-ranging implications for structured finance transactions by FATCA. Fitch Release.
On August 28, Moody’s released a report summarizing, by industry sector, the multiples of rent expense that are generally used in global standard adjustments to capitalize leases that companies account for as operating leases. Moody’s Report.
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