FATCA/CRS
FATCA and CRS are guidelines falling under the Automatic Exchange of Information (AEOI) which denote exchange of financial account information between competent authorities of different jurisdiction to be followed by the Financial Institutions, Individuals falling under the scope of the guidelines and entities.
FATCA and CRS-related laws are designed primarily to identify and prevent the use of offshore accounts and corporate structures designed to illegitimately avoid paying domestic tax. This also covers individuals working offshore.
FATCA is an enactment by the US senate with an extraterritorial jurisdiction and affects ^US Persons^ in all jurisdictions, since United States tax liability is for income earned globally. As per FATCA the obligation to report is on Foreign Financial Institutions. CRS was formulated and introduced by the Organization for Economic Co-operation and Development (OECD) which is already approved by more than 110 jurisdictions to exchange information on Tax matters. More Jurisdictions are committed to join the CRS Reporting.
The UAE has entered in to an Inter Governmental Agreement with the US Internal Revenue Service for exchange of the account information of US persons. The UAE-US IGA was ratified pursuant to Federal Law No. 9 of 2016 and establishes the framework for the exchange of information between reporting UAE financial institutions authority to the IRS. The UAE signed the Convention on Mutual Administrative Assistance in Tax Matters ("MAC"), the Declaration of Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information ("MCAA") .This was also ratified by the UAE according to Federal Law No. 54 of 2018 and the MCAA according to Federal Law No. 48 of 2018.
UAE has developed a new reporting portal where all the UAE RFI must register and report, and also provide its legal entity classification for FATCA and CRS purposes. All RFIs are required to submit FATCA/CRS Risk Assessment and Annual Return.
Financial Institutions particularly the Reporting Financial Institutions (RFI) in the UAE should mandatorily follow the guidelines issued by the regulatory authority in the UAE regarding FATCA/CRS matters. The Regulatory Authorities for the respective RFIs are the CBUAE, SCA, DIFC and ADGM. Entities not falling under these regulatory Authorities are directly regulated by the UAE Ministry of Finance for FATCA/CRS purpose.
Even though there has not been much scrutiny by the Regulators and Tax Authorities earlier with respect to FATCA /CRS reporting, the recent penalty imposed by the UAE authorities indicates that FATCA /CRS compliance also needs to be viewed seriously
RFIs and other reportable entities must be in readiness to demonstrate FATCA/CRS compliance. Reporting Financial Institutions should have written FATCA/CRS policies and processes or risk assessment. Organisations should keep in mind that the CRS and FATCA guidelines are subject to change. The OECD, for example, recently updated the CRS to include Crypto Currency and digital assets. In a nut shell FATCA/CRS compliance need to be taken seriously and should also do a risk assessment on the organization’s FATCA/CRS Compliance.
Services on Offer
Assessing the Financial Institutions (FIs ) to confirm whether they require to comply with the FTCA/CRS Reporting.
Modifying the Account opening forms in accordance with the FATCA/CRS requirement.
Conducting Gap Assessment as per FATCA/ CRS Requirement to assess the FATCA/CRS compliance of the Institution.
Assisting in making changes in the systems with respect to FATCA/CRS compliance and extraction of FATCA/CRS Reports
Assisting in obtaining GIIN (Global Intermediary Identification Number) in case the FI require to be a PFFI ( Participating Foreign Financial Institution) and to register with the Ministry of Finance for reporting FATCA/ CRS.
Designing the FATCA/CRS certification for both Individuals and Entities.
Drafting and reviewing FATCA/CRS policy
Training on FATCA/CRS