Vanuatu Financial Institutions Come Under Scrutiny Over FATCA Compliance Requirements
The Foreign Account Tax Compliance Act (FATCA), a United States federal law designed to combat tax evasion, has come into effect in Vanuatu. In a move aimed at curbing tax evasion by US expatriates with financial assets in the country, foreign financial institutions (FFIs) operating in Vanuatu are now required to submit reports of US customers and their wealth.
What is FATCA?
FATCA was enacted in 2010 and became effective on July 1, 2014. It requires FFIs to disclose information on US account holders to prevent tax evasion by requiring financial institutions to report the assets held by US persons or entities with US ownership of more than 10% of the capital.
How Does FATCA Apply to Vanuatu-Based Financial Institutions?
HBTF, a Vanuatu-based financial institution, has announced that it will ask customers to provide specific documentation if their account information indicates they are a US person. This includes:
- Form W-9: Request for Taxpayer Identification Number and Certification
- Form W-8: Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding
- Form W-8BEN-E: Certificate of Entities for United States Tax Withholding
What Documentation is Required?
US persons, both individual and entity, are required to provide documentation such as:
- Proof of US citizenship or residency
- US place of birth
- Current US address
- US telephone number
- Standing instructions to pay amounts to an account maintained in the US
- Current power of attorney or signatory authority granted to a person with a US address
Entities with US ownership must also provide similar documentation, including:
- Proof of US entity status
- US residence
- Current US address
- US telephone number
What are the Consequences of Non-Compliance?
HBTF has advised customers that they are responsible for providing accurate information and must notify the bank immediately if there is any change in their details within 30 days. Customers may also be contacted to provide further information or documentation to verify their tax status under FATCA.
What Can You Do?
For more information on FATCA, individuals can visit the Internal Revenue Service (IRS) website. However, it is recommended that US Person Taxpayers (or representatives) contact HBTF’s customer service officers or relationship managers to provide necessary information and documentation for compliance purposes. As a reminder, HBTF does not provide tax advice, and customers are advised to consult their tax advisors regarding FATCA requirements and local legislation.
Remember: It is essential to stay compliant with FATCA regulations to avoid any penalties or fines. If you have any questions or concerns, please contact your financial institution’s customer service team for assistance.