US Congress targets foreign accounts used by US taxpayers as the subject of the new compliance
The Finance Ministry of the UAE has established the new Foreign Account Tax Compliance Act (Fatca) with a joint venture with the US. In Abu Dhabi, it was ratified by Younis Haji Al Khoori and Barbara A. Leaf, the Undersecretary of the Ministry and the US Ambassador to the UAE, respectively.
The US Congress has been using Fatca for 6 years now, and has made it mandatory to post annual reports on any and all US customer account information. This law takes place is in effect in foreign financial institutes.
Khoori commented on the recent agreement by stating that the US was eager into sealing the deal, and now, UAE financial institutions will be safe as well. If any companies do not follow this regulation, they run the risk of facing a 30% penalty, essentially hampering their business and overall market operations.
Khoori further stated that the Ministry has been given the role to ensure everything needed for Fatca to go according to plan, and for the rule to be integrated in UAE finance systems as well.
Ambassador Leaf emphasized on Fatca’s importance in the role of developing a global impact in the international market, and cut down tax evasion. It was made obvious that the pact will strengthen the bond between the UAE and the US.
It has been announced that the first Fatca report for 2014 has to be submitted by the end of this year. Fortunately for sovereign funds, specific government institutions and international organizations, they do not have to post the annual Fatca report.
The reports will go directly to the US Treasury Department through the foreign government. It will contain information about US citizens applying foreign companies for their own benefits, and will also look at their US shareholders who are in possession of more than 10% of the company in question.
The US Treasury Department has also been chosen as the receiver for the agreement, and everything else necessary with it, on 14th April 2013. This complies with a strict UAE Cabinet Decision.
The aftereffects of this decision have been said to be controlled by the Governor of the UAE Central Bank, the Minister of State for Financial Affairs and the Minister of State for Foreign Affairs. This high level committee will look over the negotiations to be done alongside, and has employed international consultants to help with the overall process, especially in the legal sectors.