Following the signature of the intergovernmental agreement (“IGA”) between Malta and the US on the 16th December, 2013 whereby the latter agreed to implement Foreign Account Tax Compliance provisions (commonly known as FATCA) in Malta, the Inland Revenue Department (“IRD”) has issued draft FATCA Regulations and Guidelines implementing the said intergovernmental agreement.
FATCA requires financial institutions outside the US to register with the IRS of the US and to pass information about their US customers to the US tax authorities, namely the Internal Revenue Service (IRS). A 30% withholding tax will be imposed on the US source income of any financial institution that fails to comply with FATCA.
The 5th May, 2014 was designated as the final day for financial institutions to register with the IRS for guaranteed inclusion on the first list of registered FATCA compliant financial institutions by applying for Global Intermediary Identification Number (GIIN). However, as Malta has signed a Model 1 IGA, Maltese financial institutions may benefit from an extended deadline for registration of 1st January 2015.