In response to Executive Orders requiring a broad federal review of existing regulations, Treasury and IRS issued this morning proposed regulations easing certain compliance burdens imposed on foreign financial institutions and withholding agents by the Foreign Account Tax Compliance Act (FATCA) regime.
The proposed regulations would eliminate withholding on payments of gross proceeds, defer withholding on foreign passthru payments, eliminate withholding on certain insurance premiums, and clarify the definition of investment entities. They also provide guidance on certain due diligence requirements of withholding agents and clarify procedures for refunds and credits of amounts withheld.
The announcement notes that Treasury and the IRS have received substantial comments from stakeholders about the mammoth compliance burdens imposed by the FATCA regime, and that given the high level of FATCA compliance worldwide that has been achieved to date, some of the more onerous FATCA regulatory requirements can be eased. Foreign financial institutions and withholding agents will no doubt welcome these proposed regulations.
We will publish additional analysis of the proposed regulations in future posts.
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