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FATCA Compliance Looms for Costa Rica and Panama

Article Summary:

Very few financial institutions in Costa Rica and Panama are prepared to meet the Foreign Accounts Tax Compliance Act regulations. The reason? Most are waiting for clarification from the U.S., especially given the possibility that there exists more agreements to be signed to simplify the reporting process.

Photo Credit: Microbuilt

Original Article Text From el Financiero CR via Google Translate :

The FATCA is Pending

No turning back, the Foreign Account Compliance Act (FATCA) is a reality and the truth is that to date, very few financial institutions in our region who are prepared to meet this U.S. regulation. The reason? Most are waiting for clarification of the overcast day, especially given the possibility that the U.S. Government. UU. signing intergovernmental agreements to simplify the reporting process.

Recall that this U.S. legislation seeks bank account information, transactions and investments that U.S. taxpayers are outside its borders, information will be collected and sent directly to the U.S. Government for all financial institutions in the world. Prior to that, each of the entities should sign a contract with the Treasury Department that country.

However, nothing is permanent but change and report these conditions could be altered by the possibility that gave the U.S. government. UU. intergovernmental agreements signed with countries that require it. Through these, the world’s financial institutions should not sign the contract with the Department of the Treasury and, instead of sending the information to the U.S. government, it would have to provide their own government, which, as an intermediary, send the data periodically.

To date, Costa Rica has not negotiated or signed this agreement, which they have made Spain, Japan, Switzerland, Germany and the UK, among others.

Dangerous Delay
Many financial institutions have delayed the process of implementing this legislation with the hope that this agreement is signed. This position is highly risky, especially because they keep on hold the process complicated and need gap analysis, where shall contrast the current situation of the financial institution with FATCA requirements. Only after this initial phase done, we could design new processes and modify internal procedures and external entity to proceed with the reporting of information, either to the IRS or the government tico.

There can be order when in a hurry, and there are very few months to the end of the time given to prepare. Waiting to define whether or not Costa Rica sign an intergovernmental agreement for FATCA, is an unnecessary and dangerous delay that could limit the ability of banks to conduct business as usual, especially considering the very high failure brings fines.

Regardless of who will provide the information, financial institutions should perform the same gap analysis to define the implementation process and adapt their computer systems.

Although prudence does not prevent all evil, lack never fails to attract. Most important in the implementation of FATCA is to ensure that business never generated revenue will be constrained by preventable situations and, therefore, it is unwise to expect the unnecessary.

Link to Original Article:

From el Financiero CR

  • http://1389blog.com/ 1389AD
  • Just_Me_Also

    You guys are dreaming if you think an IGA is your salvation. It doesn’t release your requirements to register with the IRS, and it doesn’t less the burden of all the software and data collection complications you have to face.

    You will still have a Big Cost with no return, and your government will not get any reciprocity either. It is a phony deal. There is little to be gained as now written. REad those model IGAs with some real comprehension of the one way street they are. Long on future promises, requiring U.S. Legislation, but short on anything right now. http://bit.ly/X1MWGu

    What you are doing, by urging your government to sign an IGA is giving up treaty rights you currently have, and you are asking for a bailout to socialize the cost across the entire countries taxpayers and other financial services customers, again for no return for your BIG cost.

    Why you want to do this is beyond me? Instead, start making some hard free market driven choices, or sue the US for restraint of free trade. This capitulation they expect out of you is way way over the top, and not workable unless you get your governments to be co-enablers. Don’t do it. Call their bluff. Those 544 pages of regulations are totally unworkable.

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