There are significant changes being made by financial regulators, governments and banks, to ensure the protection and long-term safety of both the financial system and our customers’ interests.
One of most important regulatory changes is the Foreign Account Tax Compliance Act (FATCA), effective date 1 July 2014. This is a new legislation introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS) which aim to prevent US taxpayers from tax evasion by using non-US financial institutions and offshore investment instruments.
Generally, FATCA requires financial institutions to identify accounts held directly or indirectly by U.S. persons and to report relevant account information to the IRS. In order to ascertain customers’ US or non-US tax status, FATCA requires financial institutions to collect additional information or documentation from customers. If customers fail to provide the requested information or documentation, relevant financial institutions may be required to apply a 30% US withholding tax on certain types of US-source income paid to these customers.
FATCA may affect Macau Pension Fund Management Company Limited (“MPFM”)’s customers. The degree to which customers will be affected will depend on the type of insurance policy, contract and interests they hold (directly or indirectly) with MPFM.
Impact to Macau Pension Fund Management Company Limited and our customers
MPFM is committed to become FATCA compliant. We have been reviewing and will continue to review the effect of the legislation for our customers in order to identify where we need to report information to the IRS, relevant authority or local tax authority. We may contact you to request further information in order to verify your tax status under FATCA.
You may receive more than one request for information if you have multiple relationships with different members of the Dah Sing Financial Holdings Limited. Therefore, even if you believe you have already supplied the requested information, it is important that you respond to all requests.
Disclaimer: Please note that MPFM will not offer US tax advice. In respect of tax related questions, you should seek advice from professional tax advisors or refer to the IRS website (www.irs.gov).
FAQ about FATCA
1. What is FATCA?
FATCA means the Foreign Account Tax Compliance Act. It is a new legislation to help prevent US tax evasion in the USA. The purpose of FATCA is to promote tax compliance by preventing US persons from using insurance companies and other financial institutions to avoid US taxation on their income and assets. FATCA is introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS). Many countries worldwide are negotiating or anticipated to sign the inter-governmental agreements (IGAs) relating to FATCA compliance with the US government. These IGAs may result in the FATCA legislation becoming part of the local laws of these countries.
2. What is the impact of FATCA?
Insurance companies and other financial institutions will be required to report information on financial accounts (e.g. certain insurance policies and interests in policies) held directly or indirectly by US persons on an annual basis. MPFM is committed to become FATCA compliant. MPFM will therefore be reviewing our existing customer base to confirm our customers’ FATCA status, and where necessary MPFM may have to contact the customers for further information.
3. Who will be the affected customer?
FATCA will affect both individual and entity customers who are treated as a ‘US person’ for US tax purposes. The FATCA legislation will also affect certain types of businesses with US owners.
The term US person includes the following (but is not limited to):
- US citizen;
- US resident, a person residing in USA, including green card holders;
- A partnership created or organized in the United States or under the law of the United States or of any state, or the District of Columbia;
- A corporation created or organized in the United States or under the law of the United States or of any state, or the District of Columbia;
- Any estate or trust other than a foreign estate or foreign trust. (See Internal Revenue Code section 7701(a)(31) for the definition of a foreign estate and a foreign trust.);
- A person that meets the substantial presence test or certain persons who spend a significant number of days in the USA each year;
- Any other person that is not a foreign person.
4. When is the effective date of the FATCA legislation ?
The FATCA legislation is currently due to become effective from 1 July 2014. MPFM is committed to fully FATCA-compliant in accordance with the FATCA timeline.
5. What does MPFM have to do to comply with FATCA?
With the objective to comply with FATCA, MPFM will:
- Conduct a review of new and existing customers to identify those that are reportable under FATCA;
- Report information to the IRS, any relevant authority or local tax authority on all accounts held directly or indirectly by US persons. In addition, MPFM may need to report information about customers who do not provide the required documentation to us;
- In some circumstances and where customers fail to provide the appropriate information or documentation, MPFM may be required to apply 30% US withholding tax on certain types of US income paid to such customers.
6. What type of customer information will MPFM provide to the IRS?
MPFM are required by local relevant bodies to directly report to the IRS certain customer account information, including name, address, U.S. Taxpayer Identification Number, account number and account balance to the IRS or any relevant authority.
For any non-US entity customer with material interest held by US Person, MPFM is required to report the details of US owners to the IRS.
7. What will MPFM do if I do not provide the information required under FATCA?
MPFM is committed to be fully compliant with FATCA.
MPFM may not open new accounts or offer any additional product or service to customers who choose not to comply with MPFM’s requests for documentation to establish a customer’s status under FATCA.
MPFM may report information to IRS and any relevant authority about customers who do not provide the required documentation to us.
MPFM may be required to withhold tax on certain US-source payments of your account.
8. What types of information and/or documents are expected to supply to MPFM?
MPFM will be communicating to the affected customers and provide full details of the documents or information MPFM needs for FATCA purposes. Documents may include US Tax Withholding Certificates e.g. Form W-8BEN/W-9.
9. How frequent will I have to provide information concerning FATCA?
Compliance with FATCA is an on-going process. If there is any change on account information or status, MPFM may be required to contact you to obtain additional or new information so that our company will be able to update your account classification under FATCA. Before making any payment to any beneficiary of policies, we may make request for information from relevant persons for the purpose of compliance with FATCA.
10. In respect of personal individual customers - Will I only be affected by FATCA if I am a citizen of USA?
No. If an individual’s account has any of the following indicia, our company may request further information and/or documents to assess and determine if you are a US person under FATCA.
- US citizen or US residence
- US address including PO Box in USA
- US place of birth
- US telephone number
- Repeated or standing instructions to pay amounts to US address or an account maintained in US (where applicable to MPFM)
- Power of Attorney or signatory authority being granted to a person with US address (where applicable to MPFM)
11. What do I need to do if I am affected by FATCA?
In the future, MPFM will continue to review the impact of FATCA for our customers and will further communicate with the affected customers in due course. For more details regarding FATCA, please visit the IRS website (www.irs.gov), or contact your professional tax adviser for advice.
Please note that you may receive more than one request for information/documentation if you have multiple relationships with other members of the Dah Sing Financial Holdings Limited. Therefore, it is important that you should respond to all requests, even if you believe you have already supplied the requested information.
Please note that MPFM is unable to offer tax advice. Please contact your professional tax adviser or refer to the IRS website (www.irs.gov) for tax-related questions.