Local brokers, save for a few brave souls, escape Uncle Sam’s tax-reporting embrace

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Majority of the local stock brokerages have remained outside the US-mandated reportorial compliance among foreign financial institutions, a worldwide campaign designed to flush out hidden overseas wealth and minimize tax abuse among Americans and green card holders through offshore accounts.

A total of 178 Philippine-based financial firms, mostly large foreign and domestic banks and insurance companies as well as stock brokerage firms with operations in Manila, have registered themselves with the US Internal Revenue Service to comply with the Foreign Account Tax Compliance Act, a check with the FATCA website over the weekend showed.

Among the local stock brokerages without foreign partners, only Papa (of broker-dealer Myron Timothy Papa), Philippine Equity Partners (of broker-dealer Joseph Madrid) and Armstrong (of broker-dealer Tony King) have been FATCA-registered.

Brokerage firms associated with present or even past Philippine Stock Exchange officials Vivian Yuchengco (First Resources), Robert Coyiuto Jr. (Coyiuto), Trinidad Kalaw (First Orient) and Marita Limlingan (Regina Capital) were nowhere to be found in the FATCA-compliant list.

Yuchengco when reached offered a simple explanation — her brokerage has no US client.

Regina Capital chairman Victor Limlingan, on the other hand, said the family’s brokerage firm, which only last May launched an online trading facility targeting overseas Filipinos, decided to no longer accept Filipino-Americans and US-based clients because of the complicated and periodic due-diligence procedures required by Washington.

The FATCA regulations alone are contained in 534 pages.

Still, there were a number of unlikely registrants, like the Rural Bank of Angeles and the Cavite United Rural Bank, most likely on account of their acquisition by the Asia United Bank, and the Legazpi Savings Bank, which had been purchased by Robinsons Bank.

The state-owned, moribund Al-Amanah Islamic Investment Bank was also an unexpected registrant.

Two privately-held holding companies of taipan Alfonso Yuchengco, AY Holdings and GPL Holdings, were also FATCA-listed, along with UCPB-CIIF Finance and Development Corp. and Bayan Delinquent Loan Recovery 1 special purpose vehicle, the latter apparently the creditors still running after whatever assets of the failed Lopez telecom venture.

Beginning July 1, 2014, non-compliant foreign financial institutions may face a 30 percent withholding tax on certain US-source payments and certain non-US source payments that are made to them.

“FATCA impacts virtually all non-US entities, directly or indirectly, receiving most types of US source income, including gross proceeds from the sale or disposition of US property which can produce interest or dividends,” said a briefing paper produced by audit giant Deloitte.

In addition to the reportorial compliance, FATCA-listed firms will have to act as withholding agent for US source income payments to other foreign parties.

FATCA also requires even non-financial Philippine and foreign entities to identify and report certain information about their substantial US owners.

Even if the Philippine companies won’t, the local Bureau of Internal Revenue will. Under the parallel inter-government agreement signed by Manila and Washington, the BIR will furnish the IRS the threshold financial transactions of US companies and persons, including their bank accounts.

Interest paid by foreign branches of US banks like Citibank and Bank of America to overseas US citizens and green card holders also fall under FATCA’s so-called “withholdable” payments.

Total-ly confusing

With its P15 million VAT-related problem with the Bureau of Internal Revenue still unresolved, Laguna TechnoPark-based industrial gas supplier Pilipinas Total Gas Inc. now has an even worse problem.

Pilipinas Total Gas’ trademark registration has been choked off, with the Intellectual Property Office last month granting the opposition of French gas giant Total to rescind the local name as it is confusingly similar to that of the French multinational’s.

The French Total, incidentally, also operates the Total gasoline station chain in the country.

The French multinational was represented in the litigation by Sycip Salazar Hernandez and Gatmaitan, while the local company, by Quasha Ancheta Pena and Nolasco, with no less than a partner, Grace Bay, serving as corporate secretary of Pilipinas Total Gas.

Money-go-round

Filipino engineers, at least some of them, are apparently better appreciated in the Middle East.

Partners Adam Abinales and Carlos Villaraza have been invited by the Saudi Council of Engineers to speak at a structural engineering conference in Dhahran on July 29 and30.

The two will be joined by engineering experts Anthony Pimentel and Federico Monsada also as conference speakers.

Terminal operator Enrique Razon Jr.’s recurring labor headaches with US workers in the port of Portland, Oregon seems to have taken a massive dose of industrial pain relief.

ICTSI Portland and the dockworkers last week reached an agreement literally within an hour, and without the need for a government-appointed arbitrator, after the unionized workers did not return from their lunch break.

Heard through the grapevine

GMA-era Environment and Natural Resources Secretary Michael Defensor can provide some provenance on the P55-million “Juan Luna” painting that was brought into the country by society art dealer Pico Gonzales.