Transcript Title – Times New Roman 28pt, Line spacing 28pt Title 2

Foreign Account Tax
Compliance Act (FATCA)
Assessing its impact and developing
strategies to approach it
FATCA overview
US owner
IRS (US Tax Authorities) concern
Bank
account
• US persons escape their US tax obligations by
holding assets through non-US structures &
products
Trust
IRS response
IFA / wealth
manager
Platform
Broker
Insurance
product
Fund
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• The default position is that FFIs will suffer 30%
withholding on U.S. sourced payments (e.g. all
income & sales proceeds from the US)
• Alternatively, FFIs can enter an agreement with the
IRS and become “participating FFIs”
Custodian
Foreign
Financial
Institutions
• Non-US financial institutions designated Foreign
Financial Institutions, or “FFIs”
Income & sales proceeds
US assets
• Expectation to have entered into an FFI agreement
by 30 June 2013
© 2011 Deloitte LLP Limited. Private and confidential.
FATCA overview
Specific Definitions
 Non-U.S. entity that accepts deposits, holds financial assets for the account of others as a substantial
Foreign
Financial
Institutions
(FFIs)
part of its business, or engages primarily in the business of investing or trading securities,
commodities, partnerships or any interests in such positions
 Includes not only entities that are normally recognized as financial institutions such as banks, broker
dealers and custodians, but also insurance companies, pension plans, mutual funds, hedge funds
and family investment vehicles
 Any payment of interest (including any portfolio interest and original issue discount), dividends, rents,
Withholdable
payments
royalties, salaries, wages, annuities, licensing fees and other fixed or determinable annual or
periodical (FDAP) income
 Gross proceeds from the sale or disposition of U.S. property of a type that can produce interest or
dividends
 Interest paid by foreign branches of U.S. banks
 Certain “passthru” payments
 A financial account is any depository or custodial account maintained by a foreign financial institution
Financial
accounts
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and, any equity or debt interest in a foreign financial institution (other than interests that are regularly
traded on an established securities market).
 Identify financial accounts (specific actions for Individual accounts and Entity accounts)
 Identify US, non-US and recalcitrant accounts (for individual accounts)
© 2011 Deloitte Touche Tohmatsu Limited
FFIs - Agreement with the IRS
• In order to avoid withholding an FFI will be required to enter into an agreement with the
U.S. Treasury by 30 June 2013 whereby it will:
• Obtain information to determine which holders are U.S. accounts
• Comply with verification and due diligence procedures on such accounts as required by the
IRS
• Report information regarding certain U.S. accounts to the IRS on an annual basis
• Where foreign law would prevent such reporting obtain a waiver and if unable to obtain a
waiver, close the account
• Deduct and withhold the 30% tax on payments to recalcitrant account holders,
• Recalcitrant account holder is any account holder that does not provide documentation as to
its status as U.S. or foreign or fails to provide a waiver if located in a foreign jurisdiction that
prevents reporting of any information on the account holder
• Comply with requests from the IRS for any additional information
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© 2011 Deloitte Touche Tohmatsu Limited
What does FATCA mean for individuals?
Account Requirements
US Accounts
 Information will be
reported
 Static data - Name,
Address, Tax
Identification Number
(TIN), account number
 Transactional data certain balances and
gross receipts /
withdrawals
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Non US Accounts
 No information reported
 No withholding
Undocumented
Accounts (Recalcitrant)
 Withholding tax at 30%
will apply
 Account will be closed
Private Family
Company / Vehicle
 Certify whether US
persons have a 10%
interest (directly or
indirectly)
 Information will be
reported if US person
has interest >10%
© 2011 Deloitte Touche Tohmatsu Limited
What does FATCA mean for individuals?
US Indicia
Documentation Required
US citizenship or lawful permanent
resident
Obtain W-9
US birth place
1.
2.
3.
Obtain W-9 or W-8BEN; and
Non-US passport or similar documentation establishing
foreign citizenship; and
Written explanation regarding US citizenship
US address (residence, correspondence,
or PO Box)
1.
2.
Obtain W-9 or W-8BEN; and
Non-US passport or similar documentation establishing
foreign citizenship
Instructions to transfer funds to US
accounts or directions regularly
received from a US address
1.
2.
Request W-9 or W-8BEN; and
Documentary evidence establishing non-US status
Only address on file is “in care of” or
“hold mail” or US PO Box
Request W-9, W-8BEN; or
Documentary evidence establishing non-US status
Notice 2011-34 excludes foreign PO Box as US indicia
Power of Attorney or signatory
authority granted to person with US
address
Request W-9, W-8BEN; or
Documentary evidence establishing non-US.status
© 2011 Deloitte Touche Tohmatsu Limited
Family Governance
Opening the Discussion
Ali Kazimi
December 2011
Agenda
1. What is family governance?
2. What are the benefits achieved?
3. How can you get started?
4. Q & A
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Financial Advisory Services
© 2011 Deloitte Corporate Finance Limited. Private and confidential
What is Family Governance?
Family Governance provides the framework in which,
roles, policies, processes, and controls needed to guide
decisions can be established, monitored, and modified
to attain organizational goals and objectives.
Family
Governance
Roles
Why is it important to high net worth families?
Controls
Policies/
Creates a roadmap for families to achieve their goals
Processes
and objectives by:
• establishing a vision and plan
• promoting accountability among family members
• creating a set of controls
• providing guidance by a set of experts (i.e., independent
board members, trustees and other advisors)
• addressing significant and difficult family questions
• providing a forum to resolve disputes and open lines of
communication
• helping family members regard one another as peers
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Financial Advisory Services
© 2011 Deloitte Corporate Finance Limited. Private and confidential
What are the benefits achieved?
• Embodies the family’s evolving philosophy towards the type of legacy it
wants to leave behind.
• Gives stakeholders a voice in the rules that guide decision-making.
• Eases family dynamics (i.e. family members feel more comfortable taking
decisions forward).
• The decisions made will maintain current and future generations, not simply
maintain current life styles.
• Helps visualize the impact on future generations by focusing on growth of the
investment instead of individual family members present goals.
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Financial Advisory Services
© 2011 Deloitte Corporate Finance Limited. Private and confidential
How can you get started? Taking the right steps….
• Attain family buy-in to recognize the need for a board and its potential long
term benefits
• Establish stakeholders roles, authorities, and obligations - Create a process
of when and how stakeholders should interact with various family groups and
trusts
• Start with a discrete investment or pool of funds - Identify an amount of
money that will be bifurcated from other investments
• Simply invite people to participate in a meeting to discuss the family’s goals `
and objectives for the company
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Financial Advisory Services
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Questions and Answers
? ? ?
Contact Information
Ali Kazimi
Managing Director
International Tax Services
Deloitte & Touche Middle East
Email:
Tel:
Mobile:
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Financial Advisory Services
[email protected]
+971 4 506 4910
+971 50 854 7729
© 2011 Deloitte Corporate Finance Limited. Private and confidential
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