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Irish Funds Industry Welcomes FATCA Proposed Regulations
16th February 2012...The Irish Funds Industry Association (IFIA) has welcomed the news that European fund managers stand to save up to a reported $1 billion in costs associated with reporting obligations under FACTA. The news comes after the Department of Treasury and Internal Revenue Service issued anticipated proposed regulations providing guidance for foreign financial institutions, non-financial foreign entities, and US withholding agents to implement various provisions under FATCA last week.
FATCA originally required foreign funds to enter into an agreement with the US Internal Revenue Service or face large tax penalties on US source income or gross proceeds from disposals. However, the new proposals mean that companies in FATCA partnering countries will not have to enter into a detailed agreement with the IRS but only register with the tax authority. The US has made the move in a bid to tackle legal issues facing foreign institutions seeking to comply with FATCA.
Essentially the new proposals mean that firms would be able to comply with their reporting obligations by reporting information to the FATCA partner rather than the IRS. This means that the US authorities would ultimately receive the necessary information while, at the same time, reporting costs for foreign firms would be significantly reduced.
While Ireland is currently not included in the newly formed FATCA partnering tax agreement, it has an information exchange agreement with the US, is a reporting country under the EU Savings Directive, does not have banking secrecy challenges and plans to be part of any inter-Governmental arrangements on FATCA.
Ken Owens, Chairperson of the IFIA, said: “This is most welcome news and demonstrates a practical approach to European fund managers meeting their reporting obligations under FATCA.
“Ireland already has an information exchange agreement with the US and we are very fortunate to have the support of Government which is doing all it can to support the ongoing growth in our industry by making any and all necessary amendments.”
The Irish Government reinforced its commitment to the industry in last week’s Finance Bill when it introduced a package of 21 measures to help improve the attractiveness and competitiveness of the international financial services industry.
Most of the measures were aimed at simplifying how complex financial transactions are treated for tax purposes to make it easier to do business in Ireland.
The measures include a reduction in double taxation in the corporate treasury and aircraft leasing sectors, enhancing the tax regime for Islamic finance and allowing Irish structured finance companies to invest in forest carbon credits to support the Green IFSC initiative.
The Government is also introducing changes to ease the administrative burden in relation to non-resident investors in Irish investment funds and extending relief for losses in groups to their companies outside the European Union and the European Economic Area.
The measures also address tax issues for investment funds arising from the UCITS IV EU directive introduced last July.
The Finance Bill also revealed personal income tax incentives for executives coming to Ireland to create new jobs.
Last July the Government announced a strategy to create 10,000 jobs in the financial services industry over the next five years. There are more than 30,000 employees working in the International Financial Services Centre in Dublin with the Irish funds industry creating more than 1,200 net new jobs in 2011.
From irishfunds.ie
