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William Byrnes (Texas A&M) tax & compliance articles

tick-tock, tick-tock, no movement on IGAs yet this week with just 64 and 140 countries FFIs left out in the cold

Posted by William Byrnes on May 14, 2014


Same 64 IGAs Published or in Effect since Friday May 9th … 

2 IGAs “agreed in substance” have been added last week, importantly Hong Kong and Armenia.  See my weekend update at 2 new IGAs brings it to 64 brides, 148 bridesmaids remain in waiting … and other important FATCA updates

What about the other 148 Non-IGA countries?  

FATCA Portal registration remains open, but the formal IRS deadline for inclusion on the June 2nd GIIN list of participating foreign financial institutions (“PFFI”) passed May 5th. See my previous article about the May 5th deadline and consequences of its passing that applied to all FFIs in the non-IGA states and jurisdictions.

Did all the FFIs that are in the 148 countries and jurisdictions that do not have an IGA register for a GIIN?  There is not one reliable number of how many financial entities in the world qualify as a financial institution requiring FATCA registration.  Industry experts have put forward a reasonable range of 20,000 to 30,000 such entities that qualify as FFIs that still need to register or complete registration for a GIIN, though figures as high as 80,000 have been suggested (probably such estimates include branches in the count of financial institutions).  The list of FFIs requiring registration includes by example trusts companies, investment funds, and banks.

It is possible that on July 1st an unregistered FFI is considered non-participating (NPFFI) for purposes of FATCA withholding, but by example, on August 1st its country agrees an IGA in substance that Treasury announces on its FATCA site and the NPFFI goes back to FFI non-withholding status because of the extension related to IGAs, at least until that final December 22 deadline mentioned in Announcement 2014-1.  Model 1 IGA FFIs with a GIIN are classified as “Registered Deemed-Compliant Foreign Financial Institutions” (RDCFFI) on the new W8-BEN-E (see previous article) instead of as Participating Foreign Financial Institutions (PFFIs) pursuant to the regular FATCA FFI agreement and Model 2 IGA.

Was the May 5th Deadline a Hard Deadline?

Probably Not.  The IRS states the following on its FATCA Registration Portal: “the IRS believes it can ensure registering FFIs that their GIINs will be included on the July 1 IRS FFI List if their registrations are finalized by June 3, 2014.”  (See Notice 2014-17, page 6: “FFIs that finalize their registrations after May 5 or June 3 may still be included on the June 2 or July 1 IRS FFI List, respectively; however, the IRS cannot provide assurance that this will be the case. The IRS will continue processing registrations in the order received; however, processing times may increase as the May 5 and June 3 dates approach.”)  

Moreover, the IRS built in a 90 day safeguard for FFIs when a GIIN has been applied for but not yet received:

§1.1471-3(e)(3) Participating FFIs and registered deemed-compliant FFIs—(i) In general. … A payee whose registration with the IRS as a participating FFI or a registered deemed-compliant FFI is in process but has not yet received a GIIN may provide a withholding agent with a Form W-8 claiming the chapter 4 status it applied for and writing “applied for” in the box for the GIIN. In such case, the FFI will have 90 calendar days from the date of its claim to provide the withholding agent with its GIIN and the withholding agent will have 90 calendar days from the date it receives the GIIN to verify the accuracy of the GIIN against the published IRS FFI list before it has reason to know that the payee is not a participating FFI or registered deemed-compliant FFI. … (emphasis added)
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If you are interested in discussing the Master or Doctoral degree in the areas of international taxation or anti money laundering compliance, please contact me profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour” 

One Response to “tick-tock, tick-tock, no movement on IGAs yet this week with just 64 and 140 countries FFIs left out in the cold”

  1. […] all nations in the world, with both IGA status and number of registered FFIs per country. See also Prof. Byrnes’s blog of May 2014 on the lack of […]

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