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FATCA Announcement on IGAs and Registration Deadlines

03 Apr 2014

The US Treasury and IRS have recently issued Announcement 2014-17 (the "Announcement"), which essentially clarifies two important aspects of the implementation of FATCA.  The Announcement can be viewed here. 

Firstly, jurisdictions listed on the IRS/Treasury websites as having an inter-governmental agreement ("IGA") in effect will also now include jurisdictions that have reached agreement with the US on the substantive terms of an IGA, before 1 July 2014, and have consented to be included on the Treasury and IRS list, even though the IGA has yet to be signed. 

The affected jurisdictions can be viewed here, which includes the British Virgin Islands ("BVI") and Brazil. 

This is of significance to those Financial Institutions domiciled in such listed jurisdictions as they will be permitted to register on the FATCA registration website, and certify their status to a withholding agent, as if they were domiciled in a jurisdiction with a signed IGA.  Reporting Financial Institutions in Model 1 IGA jurisdictions will also be able to take advantage of the effective extended deadline for GIIN registration until 31 Dec 2014 (see further below). 

It is also of relevance to those Financial Institutions that are part of wider international groups, who may be impacted by the Expanded Affiliated Group provisions under the US FATCA Regulations, or the Related Entity provisions under an IGA, as such entities will now be granted the status of deemed compliance, which would be advantageous to status of the wider group. 

Treasury expects to add jurisdictions as they consent to inclusion on the list and additional agreements in substance are reached.  Jurisdictions that reach agreements in substance on or after 1 July 2014 will not be included in the list of jurisdictions that are treated as having an IGA in effect until the IGA is signed. 

Secondly, the Treasury/IRS have split the former issuance date of the Global Intermediary Identification Number ("GIIN") list and extended the deadline by which registrations must be made, in order to be on the GIIN list as of 1 July 2014. 

The IRS will be publishing the first GIIN list on 2 June 2014, for which the deadline of registration is 5 May 2014.  The IRS will be publishing a second GIIN list on 1 July 2014, for which the deadline of registration is 3 June 2014.  In essence, this means the original date of registration by 25 April for inclusion on the 1 July GIIN list has been extended by an additional 39 days. 

The Announcement reminds withholding agents that they will have an additional 90 days to verify that the GIIN of a payee appears on the GIIN list, before they will be treated as having reason to know that the Chapter 4 status of the payee is unreliable or incorrect. 

Perhaps more noteworthy is the serious reinforcement made by the IRS in the Announcement in relation to the fact that a withholding agent does not need to obtain a GIIN from a Reporting FI in a Model 1 IGA jurisdiction (which now includes Ireland, the Cayman Islands and the BVI) for payments made before 1 January 2015.  See US FATCA Regulations § 1.1471-3(d)(4)(iv)(A).  This rule is highlighted three times in the Announcement. 

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