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FATCA is a U.S. law which requires all financial institutions (FIs) outside of the U.S. (also known as Foreign Financial Institutions, or FFIs) to regularly submit information on financial accounts held by U.S. persons to the U.S.
Internal Revenue Service (U.S. IRS). The U.S.’ intent of FATCA is to deter and detect U.S. tax evasion through the use of foreign financial accounts.
Failure to comply with the reporting obligations under FATCA will result in the U.S. Government imposing a 30% withholding tax on certain gross payments made from the U.S. to non-compliant FFIs. Singapore agreed to enter into a FATCA IGA with the U.S. to help Singapore-based FIs (SGFIs) manage their FATCA compliance burden.
SGFIs will need to perform due diligence checks to identify financial accounts held by U.S. persons. Thereafter, the SGFIs will need to report information pertaining to such accounts to IRAS, which will in turn transmit the information to the U.S. IRS.
The Common Reporting Standard (CRS) is an internationally agreed standard for the automatic exchange of financial account information between jurisdictions for tax purposes, to better combat tax evasion and ensure tax compliance. Singapore has committed to implement the CRS and has been exchanging financial account information with partner jurisdictions since September 2018.
A Reporting Singapore Financial Institution (SGFI) is required to register for CRS with IRAS. The entity is required to conduct due diligence on all Financial Accounts that it maintain and report the relevant account information in a timely and accurate manner to IRAS in an annual return. <p><p>
With FATCA/CRS, the participating jurisdictions are obliged to submit data related to foreign people’s assets to the local tax authorities, who will then exchange such information with tax authorities in other jurisdictions. However, each jurisdiction has its own flavor of CRS, and financial institutions (FIs) have to comply to the local requirements of each jurisdiction that they have presence in.
The entire process from due diligence, classification, data management to the reporting is non-trivial, and such knowledge is limited within small groups of the financial service industry, making it hard to scale. The reporting format is also constantly evolving and FIs need to update their reporting solutions or their IT infrastructures to support this evolution. For most business owners (especially small and medium-sized financial firms), the requirements under the FATCA and CRS regulations could be overwhelming. That is where outsourcing comes in handy. At Cambridge Advisers, we provide end-to-end advisory, analysis and reporting services.
We provide comprehensive solutions for FATCA and CRS-related matters in Singapore. These include the classification of entities, registration of entities, annual reporting services, and drafting of related compliance policies. Our suite of services include but is not limited to the following:
Cambridge Advisers is a full-service corporate and compliance firm with expertise who are well-versed with the regulatory requirements under the FATCA/CRS Regulations.
Our extensive FATCA/CRS working knowledge across financial and non-financial entities gives an accurate assessment of your FATCA/CRS compliance requirement.
With a team of experts who can advise on all aspects, including entity classification, registration, annual reporting, and drafting of related policies, we can assist your company to streamline and navigate through the complexities of the regulatory requirements of FATCA/CRS.
With the changing landscape of legislation, financial institutions need to be on top of all new regulations to avoid hefty financial penalties and mitigate reputational risks. We are well positioned to help clients meet their reporting requirements and keep up with FATCA/CRS compliance requirements.
Cambridge Advisers offers an integrated solution that combines key FATCA and CRS compliance so that entities can comply with inter-government regulations. Outsource your FATCA/CRS compliance work to our team of experts at Cambridge Advisers.
The reporting obligations under FATCA/CRS primarily affect Financial Institutions, which can include banks, insurance companies, investment managers and custodians.
SGFIs will need to perform due diligence checks to identify financial accounts held by the account holders. Thereafter, the SGFIs will need to report information pertaining to such accounts to IRAS, which will in turn transmit the information to the U.S. IRS under FATCA and the participating jurisdictions under CRS.
The U.S. has developed two Model IGAs to simplify and overcome legal issues relating to the implementation of FATCA. Model 1 establishes a framework for FIs outside the U.S. to report account information of U.S. persons to the relevant domestic authority (IRAS in Singapore’s case) which in turn provides the information to the U.S. IRS.
Model 2 establishes a framework for FIs outside the U.S. to directly report account information of U.S. persons to the U.S. IRS, which is supplemented by information exchange upon request between the U.S. IRS and its relevant government counterpart.
The CRS differs from the FATCA Model 1 IGA requirements in several ways, mainly because of the multilateral dimension of the CRS. For example, the CRS focuses only on tax residence to identify Reportable Persons whereas FATCA looks at both citizenship and tax residence in the identification of US Persons
Generally, the following information relating to a Reportable Person is reportable:
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