The US Treasury has announced that it will begin updating the Intergovernmental Agreement (IGA) List and will stop treating a country as if it has the Foreign Account Tax Compliance Act (FATCA) IGA “in effect” if the country does not prove that it has a plan to bring the IGA into force.
In 2012, the US Department of the Treasury (Treasury) released Model 1 and Model 2 of intergovernmental agreements to facilitate implementation of the FATCA. The list of jurisdictions treated as if they have an IGA in effect (the “IGA List”) may be found here. On January 1, 2017, Treasury will begin updating the IGA List to confirm whether jurisdictions have demonstrated firm resolve to bring an IGA into force.
The IRS announcement provides that jurisdictions that have not brought their IGA into force will no longer be treated as if they have an IGA in effect. If the jurisdiction wishes to continue to be treated as having an IGA in effect must provide a detailed explanation of why the jurisdiction has not yet brought the IGA into force to Treasury by December 31, 2016. Also, a step-by-step plan that the jurisdiction intends to follow in order to sign the IGA (if it has not been signed yet) and bring the IGA into force must be provided.
In evaluating whether a jurisdiction will continue to be treated as if it has an IGA in effect, Treasury will consider whether: (1) the jurisdiction has submitted the explanation and plan (with dates) described above; and (2) that explanation and plan, as well as the jurisdiction’s prior course of conduct in connection with IGA discussions, show that the jurisdiction continues to demonstrate firm resolve to bring its IGA into force.
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