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FATCA stands for the Foreign Account Tax Compliance Act. It is a piece of legislation to counter tax evasion in the United States of America (US), introduced by the United States Department of Treasury (Treasury) and the US Internal Revenue Service (IRS). The purpose of FATCA is to encourage tax compliance by preventing US persons* from using banks and other financial organisations to evade  US taxation on their income and assets.

 

A significant number of countries worldwide have signed intergovernmental agreements* (IGAs) relating to FATCA compliance with the US* government. These IGAs will result in the FATCA legislation becoming part of these countries' local laws.

 

*For any defined terms please see the Table of terms and definitions.

FATCA's objective is the prevention of tax evasion by identifying US persons* who invest directly in offshore accounts, or indirectly through the ownership of foreign passive income generating entities.

FATCA will require foreign financial institutions (FFIs)* or local tax authorities to provide information to the US Internal Revenue Service (IRS) on accounts held by US persons*. In addition, passive non-financial foreign entities (NFFEs)* will be required to provide information on their substantial US* owners to their FFIs where the passive NFFE holds its accounts.

To enforce compliance, a 30% withholding tax will be imposed on certain payments should the FFI and its underlying account holders, not comply with the FATCA legislation.

 

*For any defined terms please see the Table of terms and definitions.

The term 'United States citizen' or 'US citizen' means:

·         An individual born in the US; or

·         An individual whose parent or parents is/are a US citizen(s); or

·         An individual of whom either one or both parents were born in the US; or

·         A former alien who has been naturalised as a US citizen; or

·         An individual born in Puerto Rico; or

·         An individual born in Guam; or

·         An individual born in the US Virgin Islands.

‘CRS’ is the abbreviation for the ‘Common Reporting Standard’. The CRS is an initiative by the Organisation of Economic Co-Operation and Development* (OECD) that encourages the exchange of information on a global scale between revenue authorities. This initiative seeks to identify clients who appear to have tax obligations, tax liabilities or tax residencies outside South Africa

 

Ultimately Common Reporting Standard (CRS) was designed with the intention to help fight against tax evasion and protect the integrity of tax systems.

 

*For any defined terms please see the Table of terms and definitions.

Automatic Exchange of Information (AEOI) is the exchange of information between countries without having to request it. It involves the systematic and periodic transmission of “bulk” taxpayer information between countries that have signed up to the AEOI.

AEOI exists to reduce global tax evasion.

CRS is the global equivalent of FATCA and therefore does not replace FATCA but works with FATCA to combat tax evasion and achieve global tax transparency. The CRS seeks to establish the tax residency of clients and identify jurisdictions in which the client has tax obligations. While FATCA requires tax reporting on US persons* only.

 

*For any defined terms please see the Table of terms and definitions.

To self-certify is to confirm in writing, through the completion, dating and signing of a Nedbank FATCA and CRS Individual and Controlling Person Self-certification form, whether or not, you as the account holder, are either a US person*, and/or have tax obligations, tax liabilities or tax residencies outside South Africa.

 

You may also be required to complete an IRS W-form in certain circumstances.

 

*For any defined terms please see the Table of terms and definitions.

Yes. Nedbank will provide you with the FATCA and CRS Self-certification form(s) and where required, an applicable IRS W-form. The IRS W-forms* can also be downloaded from the Nedbank website for completion and submission.

*For any defined terms please see the Table of terms and definitions.

Both the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) provide that Nedbank must obtain a valid Nedbank FATCA and CRS Self-certification form at account opening, or where there is a change in circumstances, that allows Nedbank to determine whether you are a US Person* or have tax obligations, tax liabilities or tax residencies outside South Africa.

For the Nedbank FATCA and CRS Self-certification form to be valid it must be signed (or otherwise positively affirmed, i.e., involving some level of active input or confirmation) by the account holder*.

It MUST be dated, and must include the following information relating to the account holder:

·         Name of the account holder.

·         Identification number of the account holder.

·         Physical address of the account holder.

·         Postal address of the account holder.

·         Date of birth of the account holder.

·         Country of birth of the account holder.

·         Place of birth of the account holder, if outside South Africa.

·         Answers to Nedbank’s two FATCA and CRS questions:

o  Do you hold US citizenship, or are you a US person* or a US national, and/or

o  Do you have tax obligations, tax liabilities or tax residencies outside South Africa?

·         Country(ies) of tax residence.

·         Tax Identification Number (TIN)* for each country(ies) of tax residence OR reasons for not providing TIN(s) [predetermined reasons].

 

*For any defined terms please see the Table of terms and definitions.

No. If you are an individual and your account indicates any of the below, Nedbank may request further information/documentation to determine whether you are deemed to be a US person* under FATCA:

·         US citizenship or US residence.

·         US place of birth.

·         US address, including US postal boxes.

·         US telephone number.

·         Repeating payment instructions to pay amounts to a US address or an account maintained in the US.

·         Current power of attorney or signatory authority granted to a person with a US address.

·         US in-care-of* or hold-mail address, which is the sole address for the account holder*.

 

*For any defined terms please see the Table of terms and definitions.

The term 'entity'* for the purposes of the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) means any person other than a natural person.

 

Included in the definition of 'entity' in the FATCA intergovernmental agreement* and the CRS legislation, is any legal person or a legal arrangement such as a trust, partnership, or association.

 

For these purposes’ ‘entity' includes, but is not limited to, the following juristic persons:

·         A private company, being a (Pty) Ltd company.

·         A public company, being a Ltd company (this company type could be listed or unlisted).

·         A state-owned company (SOC) Ltd.

·         An external or foreign company.

·         A personal-liability company (Inc).

·         A non-profit company (NPC).

·         A close corporation (CC).

·         A partnership.

·         A trust.

·         An association.

·         A stokvel.

 

*For any defined terms please see the Table of terms and definitions.

Yes. Nedbank will always provide you with the relevant Nedbank FATCA and CRS Self-certification form that you need to complete.

Where an US Internal Revenue Service (IRS) W-form* is required, based on the notes set out in the Nedbank FATCA and CRS Self-certification form, Nedbank will direct you to the Nedbank website where you can download the forms.

*For any defined terms please see the Table of terms and definitions.