Nigerian banks face October deadline for IRS registration – FATCA
Nigerian banks have been given till October 25 to register with the US Internal Revenue Service (IRS) in compliance with the Foreign Account Tax Compliance Act (FATCA) requirement.
The Regional Managing Partner, Ernst & Young, West Africa,Mr.Henry Egbiki, disclosed this at a breakfast forum to intimate operators in the financial sector of the U.S. tax-compliance obligations.
He stated that full implementation of FATCA is fast approaching and that most financial institutions in Nigeria have either not started or just heard of FATCA, but are not aware enough of what to do next.
He revealed to participants at the forum that the final comprehensive regulations supporting the FATCA law, which were issued in January 2013, outline far-reaching tax requirements and potential data privacy conflicts that will affect many deposit or investment-taking banks, insurance companies as well as investment funds outside the United States and add to the existing burden of compliance by increasing preparation time and cost.
According to him 'In South Africa, the big banks are ahead of the game in completing an impact assessment and optimizing solutions, while in the rest of Africa, FATCA is mainly unheard of. In Europe and the Middle East, a lot of the large and global financial institutions have either already completed their FATCA analysis or are already in the solution design stage.
Egbiki, who was represented at the forum by Mr. Dayo Babatunde, Financial Service Sector Leader for West Africa, Ernst & Young,said ' The primary goal of FATCA is to reduce U.S. tax evasion by enabling the U.S. Internal Revenue Service (IRS), to obtain information regarding worldwide income of U.S. persons.
He said that the legislation came in response to a series of cases in which some banks were alleged to have aided their clients evade taxes. Consequently, financial institutions around the globe now face a complex and onerous compliance burden in order to meet FATCA requirements.
If financial institutions or their account holders are found to be non-compliant, they will be liable for a 30 per cent withholding tax on certain payments received after December 31, 2013, including U.S. source interest and dividends, gross proceeds from the sale of assets that produce U.S. source income, and certain non-U.S. source income.'