Bankers in countries under U.S sanction like Syrian and Sudan want to know what they can do to comply with the U.S FATCA regime. More importantly because the rules in this regard are unclear they want to know if compliance is even possible.
For 10 Fast Facts About FATCA click here: https://franhendy.com/2012/05/10/10-fast-facts-about-fatca/
In their comments on FATCA submitted on September 26 this year the Union of Arab Banks (UAB) raised this and other concerns about the application of the new rules on foreign account tax compliance (FATCA).
Specifically, on behalf of the 300 Arab banks and financial institution members of the UAB, Secretary General Wissam Fattouh is concerned about:
- the disproportionately high cost of compliance for many banks operating in the Middle East whose U.S. clients account for less than 2 percent of their overall customer base; and
- how the IRS plans to resolve conflicts between FATCA and local laws and regulations when it comes to participating foreign financial institutions (FFIs) applying the 30 percent withholding rate on U.S.-source income payments made to “recalcitrant account holders or to a non-participating FFI.
For example, because many Middle Eastern and North African (MENA) countries do not tax residents, the application of withholding tax may be challenged, and the laws in several MENA nations make it difficult to close bank accounts.
With respect to compliance SG Fattouh explained that the high compliance costs would make it difficult for UAB members to persuade their stakeholders to implement FATCA.
He therefore suggests that the IRS lower the level of required due diligence on existing client accounts in line with the U.S. Treasury’s model intergovernmental agreements; and give ‘deemed compliant status’ to institutions operating outside their home countries if 98 percent or more of their clients are classified as resident persons.
The UAB – a Lebanon-based grouping now joins the growing list of banking associations expressing doubts about the even-handed, practical application of FATCA due to come in force next year.
For more see taxanaylst.com