(MENAFN- Khaleej Times) In this regard, the UAE's authorities have finalised a timeline for banks and financial institutions to comply with the final agreement to be inked sometime in the future. The Central Bank of the UAE has informed banks and financial institutions that the government is in the process of signing of the Fatca IGA Model 1 agreement with the US and fulfilling its requirements. Fatca targets tax non-compliance by US taxpayers with foreign accounts and focuses on reporting about certain foreign financial accounts and offshore assets.
The Act adopted by the US in 2010 targets foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The objective of Fatca is the reporting of foreign financial assets; withholding is the cost of not reporting. The requirements of this agreement include an annual compilation of data from banks and other financial institutions by the UAE regulatory authorities, which would be shared with the US Internel Revenue Service or IRS.
In order to prepare for the meeting, the Fatca Agreement requirement, banks and financial institutions have to identify US Reportable Accounts, owned by the US born people. These financial instruments include not only bank accounts but other financial assets, trading in money market institutions, bills, certificates of deposit, derivatives, transferable securities, commodity futures trading, individual and collective portfolio management.
The banks and financial institutions have to complete account identification and the due diligence procedures on the concerned customers by January 1, 2014. The banks and financial institutions have to be ready to establishing connection to the Fatca Reporting System developed by the Central Bank. All banks and financial institutions will be contacted during the first quarter of 2014 to complete the electronic link.
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