More firms signing up with IRS
EVEN MORE Philippine companies have complied with a US tax law since a July 1 deadline, after which foreign financial institutions (FFIs) not yet registered with the US Internal Revenue Service (IRS) faced penalties.
A list published by the IRS earlier this month showed that a total of 197 Philippine-based firms had complied with the Foreign Account Tax Compliance Act (FATCA) and secured “approved status” with the IRS as of August 25 — 19 more than the 178 that had secured such approval with the US tax authority as of June 24.
FFIs that failed to sign up with the IRS as of end-June faced a 30% withholding tax on all US-sourced income.
COMPLIANT
While it is difficult to ascertain which Philippine companies on the updated IRS list had beaten the deadline to comply with the US tax law — given that a previous roster released right after the deadline showed compliance only up to June 24 — firms that appeared on the list reporting compliance beyond June 24 include: J.P. Morgan Securities Philippines, Inc.; the Philippine Depository & Trust Corp.; United Overseas Bank Philippines; Unicapital Securities, Inc.; and Mandarin Securities Corp.
Major financial institutions, such as the three biggest domestic banks — BDO Unibank, Inc.; Metropolitan Bank & Trust Co.; and the Bank of the Philippine Islands — along with other prominent domestic financial players, had already been included in the list of FATCA-compliant firms released before the July 1 deadline.
Passed four years ago, FATCA, aimed at compelling Americans hiding money abroad to pay the right amount of tax, took effect in July, with foreign financial institutions required to report accounts held by American citizens.
The IRS list, updated monthly, includes universal and commercial banks, thrift banks, rural banks, insurers, investment houses, investment firms, stockbrokerages, and leasing companies, among others.
FFIs signed up with the IRS in the absence of an intergovernmental agreement (IGA), which is still being negotiated between the Philippines and the US.
An IGA involves transmission of information from FFIs to the Philippines’ Bureau of Internal Revenue, which will then pass the data to its US counterpart, the IRS.
The Philippine firms signed up under “Model 2” whereby they will directly furnish IRS information on accounts held by “US persons” with an aggregate value of at least $50,000 in the case of individual account holders, and $250,000, in the case of corporations. — Raymund Luther B. Aquino
