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27 April 2012
The Investment Management Association (IMA) today submitted its response to the proposed US Treasury regulations for the implementation of the Foreign Account Tax Compliance Act (FATCA), urging the US to consider deferring implementation to allow governments and Foreign Financial Institutions (FFIs) to work through the requirements and set-up the necessary systems and procedures.
IMA recognises positive changes to the regulation. The categories of deemed compliant entities has been widened to include collective investment vehicles and other local FFIs, thereby taking them out of the scope of the legislation. However, the rules remain unworkable in some places and changes are needed to make them practical.
The IMA also welcomes the US government's collaboration with other countries in implementing FATCA and asks that governments ensure the intergovernmental agreements minimise the compliance burden in participating countries.
It also calls for the US Internal Revenue Service (IRS) to clarify rules on how FFIs need to identify and document accountholders, noting that changes to current anti-money laundering and know-your customer practices will be costly and take time to implement.
Julie Patterson, IMA's Director of Authorised Funds and Tax, said:
“We are pleased that the US Treasury and IRS have taken on board our feedback on various matters. Many of our members invest in the US markets on behalf of their clients. We want to ensure that the implementation of FATCA does not hinder cross-border investment or add unnecessary compliance and administrative burdens and costs to firms and investors