Philippines, US Sign FATCA Agreement
On July 13, 2015, Philippines Finance Secretary Cesar Purisima and the US Ambassador to the Philippines, Philip Goldberg, signed an inter-governmental agreement (IGA) to facilitate compliance with the Foreign Account Tax Compliance Act (FATCA).
FATCA, enacted by the US Congress in 2010, requires all financial institutions (FIs) outside of the United States to submit regular information on financial accounts held by US persons to the Internal Revenue Service (IRS). Otherwise, certain payments of US-sourced income will face a 30 percent withholding tax.
Under the terms of the IGA between the Philippines and the United States, Filipino FIs will be required to report information to the Bureau of Internal Revenue (BIR), which will then relay that information to the IRS.
The two countries already have a double taxation treaty containing exchange of information provisions, under which information may be exchanged between the IRS and the BIR in response to a specific request or on an automatic basis. The IGA adds to that framework by introducing the exchange of regular reports on the financial accounts of US persons in Filipino FIs.
There is also a provision for the exchange of information to be reciprocal, providing an equivalent benefit to the Philippines. Through such, the IRS will routinely provide the BIR with reports on financial accounts maintained by residents of the Philippines in US FIs.
Source: Tax News – Philippines, US Sign FATCA Agreement
