FATCA Regulations on Cross Border Financing - IPBA 2012

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Key Terms Related to “Foreign Financial Institutions”‣ Withholdable payments made to an FFI will be subject to withholding under<strong>FATCA</strong> unless the FFI has entered into an FFI Agreement with the IRS, pursuant towhich the FFI must agree to undertake certain due diligence, reporting andwithholding responsibilities.‣ The <strong>FATCA</strong> legislation anticipates that the IRS will designate certain categories ofFFIs that will be treated as “deemed compliant” under <strong>FATCA</strong> and, as a result, willnot be required to enter into an FFI Agreement with the IRS in order to avoid the30% withholding tax.‣ <strong>FATCA</strong> also provides the IRS with discretion to exclude certain classes of financialinstitutions from the <strong>FATCA</strong> withholding regime to the extent the IRS determinesthat such entities pose a low risk of tax evasion.gsblaw.com 12
Key Terms Related to “Non-Financial Foreign Entity”‣ <strong>FATCA</strong> also requires a withholding agent, subject to certain exceptions, towithhold tax on withholdable payments made to an NFFE and to report certaininformation regarding the “substantial U.S. owners of an NFFE.‣ NFFEs excepted from these rules include:• publicly traded corporations and certain related entities;• entities organized under the laws of a U.S. territory and wholly owned bybona fide residents thereof;• foreign governments, including political subdivisions or wholly ownedagencies or instrumentalities thereof;• certain international organizations or any wholly owned agencies orinstrumentalities thereof; and• foreign central banks of issue.gsblaw.com 13
Page 1 and 2: FATCA Regu
Page 6: Key Withholding RequirementsWithhol
Page 9: Glossary of General Terms‣ Non-Fi
Page 14 and 15: Phased Implementation‣ On July 14
Page 16 and 17: FFI and NFFE Compliance Requirement
Page 18 and 19: 5-Step Procedure for Identification
Page 20 and 21: Private Banking Clients‣ Special
Page 22 and 23: Reporting on U.S. Accounts and Owne
Page 24 and 25: Procedures to Identify and Withhold
Page 26 and 27: Payors of Withholdable Payments Lia
Page 28 and 29: Updating Internal Systems‣ Payor
Page 30 and 31: Withholding Scenarios for FFIsSCENA
Page 32 and 33: Interaction with NRA Withholding Ru
Page 34 and 35: FATCA and U.S. Inc
Page 36 and 37: Withholding on U.S. Equity Swaps‣
Page 38 and 39: Notional Principal Contracts‣ An
Page 40 and 41: Specified Notional Principal Contra
Page 42 and 43: Liability of Withholding Tax‣ Wit

FATCA Regulations on Cross Border Financing - IPBA 2012

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