Speakers at a workshop yesterday called for building awareness on the US law Foreign Account Tax Compliance Act (FATCA) among the Bangladeshi financial institutions.
Citibank NA Bangladesh organised the day-long workshop on FATCA to familiarise the participants with the new law.
Enacted in 2010 in the United States, the law requires a foreign (non-US) financial institution or FFI to report to the US internal revenue service (IRS) information about certain accounts held by US taxpayers or by foreign entities in which the US taxpayers hold a substantial ownership interest.
In Bangladesh, all banks as defined in the Bank Company Act, 1991 have come within the provisions of FATCA.
The ultimate goal of the law is to ensure that income earned and assets held by the US citizens in offshore accounts or indirectly through ownership of foreign entities are appropriately reported to the IRS.
National Board of Revenue member (income tax policy), Syed Md Aminul Karim said FATCA affects both the US and non-US financial institutions.
“Its broad scope effectively impacts nearly all parties that make or receive cross border payments.”
He said a broad agreement between the two governments needs to be reached prior to implementation of the FATCA in Bangladesh.
Bangladesh Bank Deputy Governor SK Sur Chowdhury stressed that since FATCA requires disclosures which would normally be breaches of the bankers’ general duty of confidentiality under prevalent Bangladeshi laws, banks are to obtain written consents from their customers before reporting the requested information to IRS.
He also encouraged the scheduled banks and financial institutions to study the implications of FATCA as it can affect all of them.
Helal Ahmed Chowdhury, vice chairman of Association of Bankers, Bangladesh Ltd and managing director of Pubali Bank Ltd, Karyn Kenny, resident legal advisor of Embassy of the United States in Dhaka, and Rashed Maqsood, managing director and Citi’s country officer in Bangladesh, also spoke.
Bangladesh Bank in a circular said as Bangladesh has not yet decided to execute an intergovernmental agreement with the US, these obligations can alternatively be discharged at individual financial institution level by registering and signing “Participation Agreements” with the IRS.
The NBR also consented on registering with the IRS if an institution has US taxpayer accounts in its books.
Therefore, financial institutions may have implications for their customers and operations should register themselves with the IRS and put in place appropriate processes and controls to ensure compliance with FATCA.
Financial Institutions should communicate with the existing customers well in advance of executing Participation Agreement with the IRS enabling the accountholders to comply with reasonable requests for information or to provide documentation to meet the FATCA obligations.