What is FATCA?

U.S. legislation with extraterritorial character and impact that seeks to identify U.S. taxpayers with financial assets abroad.

What does this law demand?

• Register with the IRS and obtain a Global Intermediary Identification Number (GIIN) and be considered a participating entity.
• Identify beneficial owners of financial assets.
• Create and implement effective policies and procedures to reasonably identify U.S. taxpayers with financial assets.
• Create and implement effective policies and procedures to identify financial assets under the control of U.S. taxpayers.
• Report to the U.S. Internal Revenue Service (IRS) U.S. taxpayers who hold financial assets with balances exceeding a specified value.
• Implement measures to identify U.S. taxpayers who are beneficiaries of or beneficial owners of foreign trusts.
• Designate a Responsible Officer.

To whom does this law apply?

• To financial and non-financial entities outside the U.S., which could be banks, credit unions, pension funds, stockbrokers, mutual companies, wealth management or private banking, trust companies, some insurance companies, law firms, among others.
• U.S. companies will now be required to withhold funds from all payments made to non-participating or recalcitrant financial entities.
• To foreign governments that must negotiate an intergovernmental agreement with the U.S. to authorize the sharing of information (lift confidentiality) and define the mechanism for reporting the information to the IRS.

What is an IGA?

• The agreement that the U.S. government signs with the local government, with or without reciprocity.
• Panama subscribed to Model 1, which means that entities subject to FATCA in Panama report to the Panamanian government, which in turn reports to the US IRS.

Who is a U.S. taxpayer?

• Any person who is a U.S. citizen or legal resident of the U.S. regardless of where he/she resides or generates income.
• Any legal entity organized under the laws of any state or territory of the United States.
• Any natural or legal person that generates taxable income in U.S. territory.