MANILA, March 17 (PNA) — The Bangko Sentral ng Pilipinas (BSP) said compliance to the US government’s Foreign Account Tax Compliance Act (FATCA) lies on the decision of Philippine banks.
BSP Governor Amando Tetangco Jr. said “FATCA compliance is basically a bank’s business decision.”
“If it decides to handle US persons, then they must manage all risks associated with that including all compliance issues. If it doesn’t want to be covered by the FATCA rules, then they simply should refrain from handling US persons,” he said.
FATCA was enacted by US Congress in 2010 to, among others, prevent US citizens from withholding information about their assets overseas to the Internal Revenue Service (IRS).
It requires foreign financial institutions (FFIs) to report to the IRS information about the accounts of US citizen.
FFIs that fail to comply with this rule will be required to pay 30 percent withholding tax for the US-sourced income placed by US citizens in the FFIs.
On July 1, 2013, the BSP issued a Memorandum urging banks to comply with the FATCA rules to prevent being sanctioned.
Tetangco said Philippine monetary officials will consider sanctions to be slapped against banks that will violate the FATCA rules.
He said the Bureau of Internal Revenue (BIR), upon the approval of the Department of Finance (DOF), has recommended that the Philippines adopt Model 1 Intergovernmental Agreement.
Under this agreement, the FFIs with US citizen clients will provide IRS the needed information through the a FATCA partner, in this case, the BIR. (PNA)