Financial firms told to brace for US-Philippines tax agreement

CEBU, Philippines – The Bureau of Internal Revenue told Philippine financial firms to prepare for the full implementation of the inter-governmental agreement (IGA) between the US and Philippines on the Foreign Account Tax Compliance Act (Fatca) next year.

Fatca, a US law, will require Philippine financial institutions to report the financial accounts owned by American taxpayers in the country.

Instead of September 30 this year, the BIR noted in an advisory the implementation of terms of the IGA and the submission of reportable accounts will instead begin in the second quarter of 2016.

“Philippine financial institutions are also reminded that the first batch of reports to be submitted shall include information relating to their 2014 and 2015 reportable accounts as detailed in the IGA,” the BIR said.

The US and Philippines signed last July 13 an agreement to implement the Fatca, a US taxation law enacted in 2010 that ensures compliance of US taxpayers who have offshore bank accounts to pay the correct taxes.

The BIR said it will inform the public on the necessary rules and guidelines to ease the compliance of financial companies with Fatca.

Under the Fatca, these companies – including banks and insurance firms – must report to the US Internal Revenue Service on the financial accounts of US nationals.

In the same way, the agreement also requires US financial institutions to give the BIR with the same information they have on Filipino people holding accounts with them.