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.