The United Arab Emirates (UAE) has entered into an Intergovernmental Agreement (IGA) in substance to implement the United States’ Foreign Account Tax Compliance Act (FATCA), reports Tax News.
FATCA, enacted by the US Congress in 2010, and taking effect on July 1, 2014, is intended to ensure that the US obtains information on accounts held at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
The UAE intends to sign a Model 1 IGA. The country’s minister of state for financial affairs, Obaid Humaid al-Tayer, said that “meetings and business workshops will be conducted at different committee levels during the coming months to finalize all required procedures in regards to signing the final draft of the agreement.”
Although the UAE has only reached an initial agreement on implementing FATCA, the US will treat it as having a full agreement in effect until the end of 2014.