Foreign Account Tax Compliance Act (FATCA)
FATCA, which affects Financial Institutions ("FIs") worldwide, aims at reducing tax evasion by US persons. It requires Financial Institutions outside the US to provide information regarding their customers who are US persons to the US Internal Revenue Service ("US IRS"). A 30% withholding tax is imposed on the US source income of any FI that fails to comply with this requirement.
The US has developed Intergovernmental Agreement (IGA) models as tools to facilitate FIs` compliance with FATCA:
More information on FATCA can be found on IRS FATCA web page.
On 30 June 2014, Malaysia reached an agreement in substance on a Model 1 IGA with the US to implement FATCA. Accordingly, Malaysia has been included in the US Department of Treasury's list of jurisdictions that are treated as having an IGA in effect with the US. The list of jurisdictions can be found by clicking on the following link: IGA List
Under the terms of the Malaysia-US IGA ("Agreement"), Reporting Malaysia-based Financial Institutions ("MYFIs") will provide Inland Revenue Board of Malaysia (IRBM) with the required account information of US persons. IRBM will then exchange that information with the US IRS.
The IGA is however still in the process of finalisation. The US Treasury through their letter dated 25th April 2017 has agreed that Malaysia remains on the Treasury IGA list and continues to be treated as if it has an IGA in effect.
The date for submitting the 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021 reportable information and NIL Returns under FATCA to IRBM has been tentatively postponed to 2022.
New! FATCA Notification XML Schema v2.3
The IRS updated the FATCA Notification XML Schema v2.3 to include new file and record level error notification codes for Nil Reports and FATCA XML Schema v2.0. The notification schema will be effective in January 2017. For more information on the Notification XML schema v2.3 and samples, go to the IDES Schema web page.
Review the revised IDES User Guide, Metadata XML Schema Guide, data preparation instructions, sample test packet and user tips and DocRefID format
The file naming convention of data packet is composed of a Coordinated Universal Time (UTC) timestamp and the entity ID or GIIN of the sender: UTC_FATCAEntitySenderId.zip. The timestamp format of the UTC is YYYYMMDDTHHMMSSmsZ. For more information, review the IDES User Guide.
You can also subscribe to FATCA eNewsletter for updates on the latest IRS news, guidance, regulations and other public information related to the FATCA.
Guidance Notes on Compliance Requirements for Malaysia-US IGA
To assist MYFIs to comply with the requirements under the Malaysia-US IGA, a Guidance Notes has been prepared. The draft was open for public comments from 15 March 2015 - 15 April 2015.
Following the comments received on the draft Guidance Notes, a revised draft was issued dated 11 September 2015.This draft will be revised accordingly once the IGA is signed.
Under the Malaysia-US IGA, MYFIs that are not exempted need to register with the IRS and obtain a Global Intermediary Identification Number (GIIN). For more information, visit the FATCA Registration Resources.
MYFIs that have completed registration and obtained a GIIN will appear on a monthly published IRS FFI list.
FATCA Data Transmission
For the purpose of FATCA reporting, US IRS has developed a platform called International Data Exchange Service (IDES). Under Model 1 Option 2 agreement, Reporting MYFIs will be transmitting their FATCA reporting data to IRBM via the IDES. IRBM will in turn authorise the onward transmission of such data held at the IDES to the US IRS.
Next steps :
A Reporting MYFI with no US Reportable Accounts is required to make a Nil return annually to IRBM.
Help Page Link
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