FATCA ADVISORY

The Foreign Account Tax Compliance Act (FATCA) was enacted by the United States Congress in March 2010 to improve compliance with US tax laws.  FATCA imposes certain due diligence and reporting obligations on foreign (non-US) financial institutions, including Philippines institutions.  These institutions will be required to report to the US Internal Revenue Service (IRS) information on US citizens with financial accounts.

ADVISORY 4 The Department of Finance (DOF), in it's letter dated 13 January 2017, to the Office of the International Tax Councel of the U.S. Department of Treasury stated to wit: "We [are] informed that on 01 December 2016, President Duterte ratified the [FATCA] agreement and it was transmitted to the Senate on 06 December 2016 for concurrence." 
ADVISORY 3
June 28, 2016
FATCA FAQs now available.
ADVISORY 2
May 10, 2016

All reporting Philippine Financial institutions (PFIs) subject to FATCA regulations are hereby advised that:

  1. FATCA reporting will not take place until the PH- US FATCA IGA has been concurred in by the Philippine Senate and has entered into force. If the IGA enters into force in September 2016, PFIs should be able to transmit FATCA data for reportable accounts in 2014 and 2015;

  2. Transmission of FATCA data by PFIs shall be through IDES. BIR will use the Model 1 Option2 data collection tool of IDES. Click on the following link for more details: Overview of FATCA Reporting through IDES (Model 1, Option 2)

  3. IRS has scheduled a test period for IDES on June 16-30, 2016. Only PFIs which registered with IRS, obtained their GIINs and enrolled in IDES can participate in the testing exercise. For more details regarding the testing, FIs should check the IRS website. 

  4. The Competent Authority Arrangement  (CAA) between BIR and IRS was signed on March 24, 2016 and may be viewed at:

https://www.irs.gov/pub/irs-utl/philippines_competent_authority_arrangement.pdf

The CAA sets out administrative details of the IGA and it will be effective once the IGA has entered into force.

ADVISORY 1
September 4, 2015

The Inter-Governmental Agreement (IGA) on the Foreign Account Tax Compliance Act (FATCA) between the Philippines and the United States of America was on July 13, 2015 and may be viewed in the link below:

http://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Philippines-7-13-2015.pdf.

Pending entry into force of the IGA, the concerned Philippine financial institutions (PFIs) are hereby advised that reporting will not take place on September 30, 2015.  However, PFIs must take the necessary steps to prepare for full implementation of the terms of the IGA and the concomitant submission of information on reportable accounts beginning the second quarter of 2016. 

PFIs are also reminded that the first batch of reports to be submitted shall include information relating to their 2014 and 2015 reportable accounts as detailed in the IGA. 

In coordination with other regulatory agencies of the Philippine Government, the Bureau of Internal Revenue (BIR) shall notify the public of further updates and promulgate the necessary rules and guidelines to facilitate compliance of PFIs with FATCA.

Any inquiries on the matter may be addressed to the BIR’s International Tax Affairs Division at eoi_itad@bir.gov.ph and contact number 927-0022. 


FATCA GUIDANCE

FATCA Registration

Reporting Philippines Financial Institutions should register at the FATCA Registration Portal as a “Registered Deemed-Compliant Financial Institution (Including a Reporting Financial Institution under a Model 1 IGA)” and obtain a Global Intermediary Identification Number (GIIN) from the US IRS’ Foreign Financial Institution (FFI)

More information on FATCA registration can be found on the IRS website (https://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA)


FATCA REGULATIONS, GUIDANCE, ISSUANCESunder construction


Overview of FATCA Reporting through IDES (Model 1, Option 2)

The table below provides an overview of the steps that a Reporting PFI should take to prepare for FATCA data reporting through IDES:

1. Preparing the FATCA reporting data file in XML format

• Generate the FATCA reporting data file in accordance with the FATCA XML Schema.  (Please see details in section below on FATCA Data Format).

• Validate the FATCA reporting data file against the FATCA XML Schema.

• If necessary, seek the services of an IT professional or vendor to assist in capturing and preparing the data in accordance with the FATCA XML Schema.

2. Enrolling with IDES

• IDES is open for enrolment. To enroll, the Reporting PFI will need:

A. Its GIIN:

B. A valid email address; and

C. A digital certificate purchased from a US IRS-approved Certificate Authority. Please allow sufficient time (minimally two weeks before enrolment) to acquire the digital certificate as the  Certificate Authority will need time to verify the Reporting PFI’s credentials before issuing the digital certificate.

• Please refer to Section 6 to 8 of the IDES User Guide for enrolment instruction and the functions available to users of the IDES (i.e. the Reporting PFI’s administrator and end users).

• The IDES Enrollment site can be accessed here.

3. Preparing the FATCA reporting packet for transmission

• In preparing the FATCA reporting packet, the Reporting PFI is required to adopt the following process and file naming convention (which is case-sensitive) strictly.

Step Process File Name Convention
1. Digitally sign the validated FATCA reporting data file

FATCAEntitySenderld_Payload.xml
Example:   
123456.999999.SL.702_Payload.xml

2. Compress the digitally signed FATCA reporting data file with Compatible compression utility

FATCAEntitySenderld_Payload.zip
Example: 
123456.99999.SL.702.Payload. zip 

3.

Encrypt the compressed FATCA reporting data file with an AES-256 key        

FATCAEntitySenderld_Payload
Example:
123456.99999.SL.702_Payload

4.

Encrypt the AES-256 key with the public key of each recipient:

  1. US IRS’ Public key downloadable from: https://www.ides-support.com
  2. Philippines BIR public key: bir.zip

 

000000.00000.TA.840_Key
000000.00000.TA.608_Key

5. Create sender metadata

FATCAEntitySenderld_Metadata.xml      
Example:
123456.99999.SL.702_Metadata.xml

6.

Create the FATCA reporting docket by following files with a compatible compression utility:

• Encrypted XML Payload (Step 3) 
• Key for the US IRS (Step 4) 
• Metadata file (Step 5) 

UTC_FATCAEntitySenderld.zip
The timestamp format of the UTC
Example
20150111T200731224Z_123456.99999.SL.702.zip

• Please refer to Section 9 of the IDES User Guide for data preparation instructions.

• Reporting PFIs are advised to seek the services of an IT professional or vendor to assist them with preparation of the FATCA reporting packet if required.

4. Transmitting the FATCA reporting packet to BIR, via the IDES

• The Reporting PFI will transmit the FATCA reporting to BIR via the IDES Gateway. The transmitted file will only be released to the US IRS upon BIR’s approval.

• The Reporting PFI will be able to upload and transmit a file using web UI or SFTP. Please refer to Section 11 of the IDES User Guide for detailed instruction on file transmission

• The Reporting PFI will receive transmission-related alerts (subject to the user’s Alert Preferences settings) from the IDES after it has submitted the FATCA reporting packet.

• Reporting PFIs are regarded to have submitted their FATCA return to BIR for the reporting year  when  they receive an email alert (with Alert Code: RC023 “Successful upload and approval by the HCTA (Model Option 2”) from IDES informing them that their FATCA reporting packet has been approval by BIR. No    further action is required until the US IRS informs BIR that the submitted FATCA reporting data file/packet contains error(s). Affected Reporting PFIs will be given additional time to correct that error(s) and submit a revised FATCA reporting packet through the IDES.


FATCA Data Format

Reporting PFIs will need to have processes in place to collate and prepare the required data in accordance will the prevailing FATCA XML Schema set out in the table below. Data Submitted to BIR in any other format will not be accepted.

Version Status XML Schema User Guide
   1.1.      Current

FATCA XML Schema
(IRS Publication Date: 19 December 2013)

FATCA XML User Guide
(IRS Publication 5124, Revised in June 2014)


FAQs

FAQs have been prepared to assist Reporting PFIs fulfilling their FATCA obligations. The FAQs will be updated on a regular basis as and when there are new developments.

download faq

FAQs – General (Under Construction)


CONTACT US

For further inquiries, you may send an email to eoi_itad@bir.gov.ph.