Malta will shortly be signing a Model Intergovernmental Agreement with the US, which will include some of the requirements and deadlines set out in the American Foreign Account Tax Compliance Act (FATCA), reports the Times of Malta. The Malta Funds Industry Association (MFIA), in collaboration with Finance Malta, recently held an educational clinic for its members and the financial services community on FATCA and its practical implications for the various stakeholders operating in the local funds industry.
The clinic was led by FATCA specialists from PwC Malta and PwC Germany. Neville Gatt, tax leader and partner at PwC Malta commented: “FATCA is one of various initiatives around the world to combat tax evasion through new reporting obligations imposed on financial institutions worldwide. “Failure to meet these new reporting obligations would result in a financial institution suffering a 30 per cent withholding tax on certain US source income. “For asset managers, FATCA is not simply a compliance exercise, it is merely one out of various legislations that is reshaping the industry at its core. It is clearly important to plan the way ahead for such FATCA requirements so as to minimise the disruption to the business operations as the FATCA deadline approaches.” FATCA became part of US legislation in 2010, its main aim being to identify US citizens that are either directly investing outside the US or indirectly earning income inside or outside the US through non-US entities.
“This is one form of several initiatives to combat tax evasion and introduces substantial reporting requirements. FATCA will have a significant process and technological impact on the fund industry and the MFIA has over the past months been very active on this subject by issuing a technical brief and holding this educational clinic in order to update and assist its members to gear up for this new requirement,” MFIA chairman Kenneth Farrugia explained.