The Foreign Account Tax Compliance Act (FATCA) was enacted by the United States (US) Congress in March 2010 to target non-compliance with US tax laws by US persons using foreign accounts. FATCA requires all financial institutions (FIs) outside the US to transmit information about financial accounts held by US persons to the US Internal Revenue Service (US IRS) on a regular basis. FIs that fail to comply will face a 30% FATCA-related withholding tax on certain gross payments made from the US to the FIs.
FATCA affects FIs worldwide. The US has developed two (2) Intergovernmental Agreement (IGA) models and this includes reaching out to partner jurisdictions using these bilateral IGAs which acts as tools to facilitate FIs' compliance with FATCA.
On 14 May 2013, the Singapore Government announced its intention to conclude a Model 1 Intergovernmental Agreement (IGA) with the US Department of the Treasury (US Treasury). The Model 1 IGA would help ease the FATCA compliance burden of FIs.
Model 1 establishes a framework of FIs outside the US to report account information of US persons to their relevant domestic authority, which will in turn provide the information to the US IRS;.
On 5 May 2014, Singapore has initiated a Model 1 IGA with the US and she has been included in the US Treasury's list of jurisdictions that are treated as having an IGA in effect. The Singapore-US IGA is expected to be signed in the second half of 2014 and will be published on the Inland Revenue Authority of Singapore's website thereafter.
Singapore Life Ltd. will comply with FATCA with effect from 1 July 2014 and will undertake to submit information on financial accounts held by U.S. persons to the Authorities.
What is the Foreign Account Tax Compliance Act (FATCA)?
FATCA is a U.S. law which requires all financial institutions (FIs) outside of the US (also known as Foreign Financial Institutions, or FFIs) to regularly submit information on financial accounts held by U.S. persons to the U.S. Internal Revenue Service (IRS). The U.S.' intent of FATCA is to deter and detect U.S. tax evasion through the use of foreign financial accounts. Failure to comply with the reporting obligations under FATCA will result in the U.S. Government imposing a 30% withholding tax on certain gross payments made from the U.S. to non-compliant FFIs.
Who is considered as a US Person?
For the purpose of FATCA, a U.S. Person means:
(a) A citizen or lawful permanent resident (including US green card holder) of the U.S.;
(b) A partnership or corporation organised in the U.S. or under the laws of the US or any State thereof, or a trust if:
(i) a court within the U.S. would have authority under the applicable law to render orders or judgments concerning substantially all issues regarding the administration of the trust; and
(ii) one or more U.S. persons have the authority to control all substantial decisions of the trust, or an estate of a decedent that is a citizen or resident of the U.S.
How does the FATCA implementation impact Singlife clients?
With effect from 1 July 2014, a new section on "Declaration of U.S. Indicia" will be added to application forms and affected post-policy documents of Cash Value Insurance Contract or an Annuity Contract offered by Singapore Life Ltd.
U.S. Indicias are indications that the client is a possible U.S. Person. Therefore, client who has one or more U.S. Indicias have complete Singlife "U.S. Person Declaration Form" to declare whether he/she is a U.S. person, and provide the completed relevant IRS Form (W-9 or W-8BEN or W-8BEN-E) together with the satisfactory documentary evidence (if applicable).
The U.S. indicias are:
I am an existing Singlife client, how can I notify Singlife if I have one or more U.S. indicia?
You can contact us directly if you have one or more U.S. indicia.
For a status change of U.S. Person to non U.S. Person, a completed "U.S. Person Declaration Form" to be accompanied by completed Form W-8BEN or W-8BEN-E with satisfactory documents evidence need to be submitted.
For a status change of non U.S. Person to U.S. Person, a completed "U.S. Person Declaration Form" to be accompanied by Form W-9 needs to be submitted.
These forms are available at here.