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IRAS Provides Temporary Relief Procedures to Certain Fatca Requirements for Singapore Financial Institutions
Recent FATCA Developments
On 13 March 2023, the Inland Revenue Authority of Singapore (IRAS) updated the FATCA reporting requirements for Reporting Singapore Financial Institutions (“Reporting SGFIs”) in response to the issuance of Notice 2023-11 (the “Notice”) by the US Internal Revenue Service (US IRS). In the Notice, the US IRS has provided a second round of temporary relief procedures for foreign financial institutions (FFIs) that have been unable to collect US TINs for pre-existing accounts (i.e., accounts opened before 30 June 2014) held by certain US persons (“specified US persons”).
The Background - FATCA in Singapore
Under the Foreign Account Tax Compliance Act (FATCA) provisions, Reporting SGFIs must collect information about financial accounts held by specified US persons (“US reportable accounts”). This information is subsequently reported to the IRAS, which forwards it to the IRS.
At account opening, Reporting SGFIs must have in place processes to determine whether an account holder is a specified US person. If so, a US tax identification number (“US TIN”) must be collected before the account can be opened.1
For pre-existing accounts, Reporting SGFIs may not have US TINs for all specified US persons. Therefore, there must be in place processes to review accounts for potential specified US persons and, where necessary, obtain US TINs (or documentation confirming that the account holder is not a specified US person).2
In lieu of a US TIN, the US IRS has permitted the provision of the account holder's date of birth as a temporary measure, giving Reporting SGFIs time to implement the necessary procedures to obtain US TINs from US reportable accounts.
Waning Patience and a Push for New Data
Despite offering a round of temporary relief procedures in 2017 (via Notice 2017-46), the US IRS acknowledges that obtaining US TINs from pre-existing accounts remains a problem for many FFIs.
Since US TINs are used to definitively identify US persons,3 their collection is necessary for the US IRS to determine whether US taxpayers are complying with their tax obligations.
Although the US IRS is sensitive to country and industry concerns, this Notice indicates their waning tolerance for non-compliance in this matter, especially since FATCA has been in force for almost 10 years.