The Foreign Account Tax Compliance Act ("FATCA"), which was enacted on 18th March 2010, is a United States ("U.S.") legislation that primarily aims to prevent tax evasion by U.S. taxpayers by using non-U.S. financial institutions and offshore investment instruments. FATCA requires non-U.S. financial institutions to conduct customer due diligence procedures to identify accounts held by U.S. persons (for U.S. tax purposes).
The Governments of Hong Kong Special Administrative Region ("Hong Kong") and the U.S. signed an Inter-Governmental Agreement ("Hong Kong IGA") on 13th November 2014 as a means of implementing FATCA in Hong Kong. The IGA seeks not only to lower overall compliance costs for the industry and safeguard the interests of these institutions and their customers, but also to demonstrate Hong Kong’s commitment to enhance tax transparency in the international arena. Unless exempted by the Hong Kong IGA, individual financial institutions in Hong Kong including banks need to sign respective agreements with the U.S. Internal Revenue Service ("IRS") covering their FATCA obligations pursuant to the Hong Kong IGA.
The Hong Kong IGA essentially requires participating financial institutions, including The Bank of East Asia, Limited (the "Bank"), to identify and report account information of Specified U.S. persons* to the IRS. In order to do so, banks are required to ascertain the U.S. or non-U.S. tax status of their customers, and may need to obtain additional information or documentation from their customers to achieve this.
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Under the terms of the Foreign Financial Institution agreement with the IRS, the Bank is obliged to carry out, amongst other thing, the due diligence procedures as prescribed in Hong Kong IGA or the relevant US Treasury Regulation to identify financial accounts held by US persons and report US account information with the account holders’ consent to the IRS annually. We will contact you if you are affected and will confirm what you are requested to do in order to confirm your U.S. or non-U.S. tax status.
The Bank is unable to offer any tax advice to customers. For tax-related questions, you should seek advice from professional tax advisors or refer to the website of the IRS for FATCA (https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-fatca).
* A U.S. taxpayer refers to a U.S. person defined by U.S. Internal Revenue Code Section 7701(a)(30) as:
• an individual who is a U.S citizen or U.S. resident alien (e.g. green card holder or meets substantial presence test);
• a partnership, corporation, or association created or organized in the U.S. or under the laws of the U.S;
• an estate (other than a non-U.S. estate as defined); or
• a trust where a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.
A Specified U.S. person is any U.S. person other than those prescribed in Treasury Regulations Section 1.1473-1(c) such as a corporation the stock of which is regularly traded on one or more established securities markets, including its member that is of the same expanded affiliated group; any bank that is defined in Internal Revenue Code Section 581; etc.
