Foreign Account Tax Compliance Act (FATCA)
The FATCA agreement was signed on April 29, 2015 between the Governments of the State of Kuwait “Ministry of Finance” and the Government of the United State of America “U.S. Department of the Treasury” to improve the international Tax Compliance and to implement FATCA.
What is (FATCA) Foreign Account Tax Compliance Act?
FATCA promotes cross-border tax compliance by implementing an international standard for the automatic exchange of information related to U.S. persons. FATCA regulations aiming to gain detailed account information about US persons on an annual basis. It’s intended to increase transparency for the (IRS) Internal Revenue Service with respect to U.S. persons who may be investing and earning income through Non-U.S. Financial Institutions.
HOW DOES FATCA WORK (INDIVIDUALS)?
The customers have to complete all data required in the Account Opening Form & Know Your Customer form, so when indicates that he/she is US Citizen or Resident (Green Card), the W9 form (which included the TIN/SSN) should be obtained/completed from the customer. But, when any U.S. indicia have been clicked, FATCA- Individual self-certification should be obtained/completed for residents in Kuwait or W-8EN for non-residents in Kuwait.
HOW DOES FATCA WORK (ENTITIES)?
All the customers have to complete all data required in the Account Opening Form, Know Your Customer form and FATCA- Entity self-certification (for Entities that resident in Kuwait) or any relevant IRS forms (for Entities that non-resident in Kuwait). But, when indicates that the Entity is U.S Entity; the W9 form (which included the TIN/EIN) should be obtained/completed.
- US person
- US citizen or resident individual.
- Partnership or corporation in US or under the law of US or any state.
- US TIN:
- It is the Social Security Number (SSN) or Employer identification Number (EIN).
Note: If the customer doesn’t have the (TIN), he/she should get the TIN before opening the account “Please read how to apply for the TIN in the W9 form page 4.
To Download W9 form, Click here..!
Common Reporting Standard (CRS)
The Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information and Common Reporting Standard was signed on August 19, 2016 between the Governments of the State of Kuwait “Ministry of Finance” and the Organization for Economic Co-operation and Development (OECD) to improve the international Tax Compliance and the exchange of financial accounts information between countries.
WHAT IS (CRS) COMMON REPORTING STANDARD?
The Common Reporting Standard (CRS) is Standards for automatic exchange of financial account information (AEOI) among countries, developed by the OECD “The Organization for Economic Co-operation. It’s allowing the tax authorities to obtain a clearer understanding of financial assets held abroad by their residents, for tax purposes.
HOW DOES CRS WORK?
All the customers (Individuals or Entities) have to complete all data required in the Account Opening Form, Know Your Customer form and the CRS self-certification form. In which the tax residency is defined in accordance with the local laws of each participating country, which may differ from one country to another, and is subject to being updated by participating countries. Accordingly, as a financial institution, CBK does not provide tax advice or tax status to its customers. So if you have any question about whether you are tax resident in country/jurisdiction, please consult your legal/tax advisor or visit the website below (OECD AEOI Portal – Country-by-Country information on tax residence) for more information regarding the Tax Residency & the Tax Identification Numbers (TINs) for the related Jurisdictions:
- Resident for tax purposes:
- Each jurisdiction has its own rules for defining tax residence, and jurisdictions have provide information on how to determine whether an Individual or Entity is tax resident in the jurisdiction on the OECD automatic exchange of information portal.
- TIN (including “functional equivalent”):
- It means Taxpayer Identification Number or a functional equivalent in the absence of a TIN. A TIN is a unique combination of letters or numbers assigned by a jurisdiction to an individual or an Entity and used to identify the individual or Entity for the purposes of administering the tax laws of such jurisdiction. Further details of acceptable TINs can be found at the OECD automatic exchange of information portal.