萬國法律事務所

On January 17, 2013, the United States Government announced the final enforcement rule for the Fair and Accurate Credit Transactions Act (FACTA). Beginning next year, foreign financial institutions (FFI) must submit to the Internal Revenue Service (IRS) of the US Government the account information of US tax residents. FFIs that do not comply will be subject to an additional 30% tax on any income that is of US origin. In addition, FFIs must complete the online registration for the IRS name list before October 25, in order not to be subject to this additional tax.

After the announcement of the final enforcement rule, FFIs must enter into agreements with the US Government. FFIs must identify all US tax residents that hold accounts, and submit the relevant information to the IRS. According to US tax regulations, “US tax residents” include US citizens, permanent residents such as green card holders, and any people that have a weighted average living time of 183 days within the US in the preceding three years. It is estimated that about five hundred thousand Taiwan Nationals will be affected.

For FFIs, certain burdens are tied to FACTA. In regards to the identification of US tax residents, in the first year of enforcement, FFIs must (before January 1st, 2015) seek to identify residents that hold accounts with total assets of over one million US Dollars. From the second year (before January 1st, 2016), personal accounts that hold assets over fifty thousand US Dollars or corporate accounts that hold over two hundred and fifty thousand US Dollars must be identified. However, information regarding any new account must be submitted irrespective of its amount.

Also, FFIs must complete an online registration before October 25, 2013 in order to avoid being subject to the additional 30% tax on US origin income. The website for online registration will be opened before July 15, 2013. The US Government plans to announce the list of FFI registries on December 2, 2013. In addition, FFIs must, every third year, declare to the IRS that it will follow the agreement made with the US Government, and will not provide instructions to its clients on techniques of circumvention such as splitting or closing accounts.

FACTA came into force on January 1, 2013. The deadline for FFIs to enter into agreements with the US Government has been postponed to the end of 2013.