The Kuwaiti government announced Tuesday its desire to sign the Foreign Account Tax Compliance Act (FATCA) Agreement with the US administration.
In a press statement, the Finance Ministry here stated the agreement stipulates the collection and submission of financial accounts of US institutions and citizens.
It pointed out that the FATCA act obliges all financial institutions whether they practice their business in or outside U.S territories to submit annual reports to the Internal Revenue Services (IRS) on any US Holding Accounts that exceed 50,000 US Dollars.
It unveiled that the Ministry of Finance has formed a committee including representatives of the Ministry''''s Tax Department, Foreign Ministry, Central Bank of Kuwait, and Kuwait Banks Association to prepare for signing the FATCA agreement.
The committee has already notified relevant financial institutions to submit data of American clients to see whether they comply with the Provisions of the FATCA Agreement. Non-compliant Americans will be asked to register on the website of the Internal Revenue Services before 5th of May 2014.
FATCA was enacted in 2010 by the Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the Internal Revenue Services (IRS) information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
The financial institutions that do not both register and agree to report face a 30 percent withholding tax on certain US-source payments made to them.
Nearly 26 European countries have already signed the FATCA agreement and 19 others are in the final negotiation stage. Almost all Gulf Cooperation Council states have started take serious step towards signing the FATCA Agreement before set deadline, 1st of July 2014, to prevent any US penalties imposed on their financial institutions