KUWAIT, April 9 (KUNA) -- The Finance Ministry is putting the final touches on arrangements for hammering out the Foreign Account Tax Compliance Act (FATCA) Agreement with the US administration.
"The Ministry of Finance has established a committee which represents members from the Tax Sector in The Ministry of Finance, Ministry of Foreign Affairs, Central Bank of Kuwait, and the Union Banks of Kuwait," the Ministry said in a press statement issued yesterday.
"The committee has also notified the concerned authorities under its supervision to submit information in relation with business activities and products to its clients and to provide a list of names of all legal entities to determine if they are in compliance with the provisions of the FATCA Agreement and to enforce their compliance to register on the website of the Internal Revenue Services before the final date for registration which is due on the 5th of May 2014." The Ministry pointed out that the Kuwaiti government has announced its desire to sign the FATCA Agreement with respect to the Intergovernmental Agreement Convention Model 1.
It underlined that "This law collects only data and information and not for the Tax Income collection purposes, and all financial institutions whether they practice their business in or outside U.S territories to submit annual report to the Internal Revenue Services(IRS) on any US Holding Accounts that exceeds the 50,000 US Dollars." The Ministry said that the Foreign Account Tax Compliance Act (FATCA) was issued by the US Congress to pursue American Foreign Accounts overseas in the Financial Institutions and Banks who are not in compliance to taxation. The purpose of FACTA is to strengthen its authority on all the tax evasion cases on United States Citizens.
The Ministry said that it will negotiate with US partner for exemptions for certain Financial Institutions which are not incompliance with the conditions stated in the FATCA Agreement.
"In this respect it was necessary to seek the services from Consultants and International Lawyer to prepare a case study for all the relevant Financial Institution in the Kuwaiti Market including all the activities, in order to negotiate with US partner for exemptions for certain Financial Institutions which are not incompliance with the conditions stated in the FATCA Agreement." It highlighted the fact that 26 European countries have already signed the FATCA agreement and 19 others are in the final negotiation stage.
"Moreover, all Gulf Cooperation Council (GCC) countries started taking serious step towards concluding the FATCA Agreement before the deadline which is on 1st of July 2014 to prevent any penalties imposed on their Financial Institutions," reads the statement.
FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the Internal Revenue Services (IRS) information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
The financial institutions that do not both register and agree to report face a 30 percent withholding tax on certain US-source payments made to them. (end) mjb.ibi